Making Money Spread Trading
Most lose, some win, and if I was running a spread-betting company I’d hedge the lot and take the %age on the spread. Easy money for them.
How to Spread Bet the FTSE 100
Let’s take the FTSE 100. Through a spread betting company, you can take a position on the FTSE 100 index
Going Long the FTSE 100
If you think that the FTSE 100 is likely to rise in the coming days – then you will take a long position (buy)
In this instance, let assume that the spread trading company is quoting the market at a spread of 5484/5485 – matching the sell and buy price.
You go long (buy) at 5485 with a stake of £10.
In the next few days you follow the market and notice that the trade is starting to move in your favour (the FTSE 100 index rises).
Once the FTSE 100 index has reached 5535 you decide to take your profits. The spread is now available at 5535/5536.
You sell at 5535, whichs nets you £500, i.e. (5535 – 5485) x £10 = £500.
Alternatively, the market could have moved against you and fallen to 5435. Had this happened, you’d have netted a loss of £50, i.e. (5485 – 5435 x £1).
Going Short on the FTSE 100
Assuming the same scenario above, let’s now say assume you were bearish about the prospects of the UK economy and thought the price of the FTSE 100 index will fall.
You decide to go short at 5484 with a stake of £10.
The FTSE 100 index falls. The market reaches 5454 and you decide to close the position at the new quote of 5453/5454.
You make a gain of of £300, i.e. (5484 – 5454) x £10 = £300.
(Note: if the market had rose to 5514 – you would have incurred a loss of £300.
Spread Trading Risks
It is important to note that spread trading being a leveraged trading product; it can result in losses that exceed your initial deposit. This is why it is so important to understand your true exposure.
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In spread betting you can find all aspects of gambling in addition to aspects of investments. In financial spread betting for example you can find the traditional investments in financial commodities, stocks, CFDs and so on, with the mix of gambling.
In spread betting you can also find the stop loss factor which prevents you from losing more than you originally invested. Spread betting can be risky as you are leveraging your investment into a bigger amount of money. This is why you can win big and you can also lose big.
<strong>In spread betting there’s no tax. It’s mainly popular in the British part of the world and it is also regulated and licensed there.</strong>
In spread betting you can make a lot of money with a relatively small investment. All of the above is true both for financial and sports spread betting. The financial spread betting is rather new but gaining popularity and available online in various spread betting companies.
In financial spread betting you have a larger variety of financial products to trade and bet on. Whether it’s called gambling or a new type of investment, in financial spread betting you can trade the same financial products you need a lot of money to trade in the real financial market. It’s some sort of virtual financial investment.
There are many websites offering tips and spread betting website reviews. This is why you can read more information about financial spread betting before you actually get to try. Furthermore before you get to try the financial spread betting platform you can try the demo mode which enables you to bet on spread virtually and see whether it’s for you or not.
You can find more information about spread betting the sports and the financial type here on the spread betting portal.