Spread Betting - A Risk Environment With No Risk Management
Spread betting is betting on stocks or taking 'educated guesses' and gambling at worst.
Let's not kid ourselves.
I know people who have had problems with gambling and day trading.
Spread betting (or trading or gambling for that matter!) can become an addiction, and I have seen first hand the problems it can cause and the lengths that people will go to hide gambling debts.
I have even come across someone who wanted his money 'locked away' so he couldn't touch it as he couldn't control himself, and couldn't even remember putting on large bets in the previous week.
Spreadbetting is betting/gambling in the following scenarios: - The trades are in the favour of the house (spread) - You're involved in a profession without the education - You're involved in the profession without management and coaching - You're involved in a risk profession without risk control Remember that in this game 80% of traders lose.
Some basic rules of investing/trading/spread betting: - Never risk more than you can afford to lose.
- A profit is a profit.
- Profits are usually made when you buy, not when you sell.
- Know when to sell, even if it is at a loss.
- Don't give up the day job! There are ways to be in the 20% of traders that end up ahead in this game.
I think one way is to keep leverage low (always calculate how much you are 'investing' in terms of real capital investment i.
e.
£1pp = 100 shares), and treat it as much as you can like conventional investing.
Pick some good growth companies and go long for days or weeks (if you are in a bull trend that is), or vice versa with debt laden companies in bearish periods.
This is more swing trading, or investing, rather than day trading which is very much more like gambling to be honest, especially on the indices.
There are plenty of companies who will let you use demo platforms, and although this isn't the same without real money one can start with just 10p/point with IG Index for example.
But whatever you do control your ego and make sure that your exposure makes sense - you don't want to end up with sleepless nights and no social life.
Let's not kid ourselves.
I know people who have had problems with gambling and day trading.
Spread betting (or trading or gambling for that matter!) can become an addiction, and I have seen first hand the problems it can cause and the lengths that people will go to hide gambling debts.
I have even come across someone who wanted his money 'locked away' so he couldn't touch it as he couldn't control himself, and couldn't even remember putting on large bets in the previous week.
Spreadbetting is betting/gambling in the following scenarios: - The trades are in the favour of the house (spread) - You're involved in a profession without the education - You're involved in the profession without management and coaching - You're involved in a risk profession without risk control Remember that in this game 80% of traders lose.
Some basic rules of investing/trading/spread betting: - Never risk more than you can afford to lose.
- A profit is a profit.
- Profits are usually made when you buy, not when you sell.
- Know when to sell, even if it is at a loss.
- Don't give up the day job! There are ways to be in the 20% of traders that end up ahead in this game.
I think one way is to keep leverage low (always calculate how much you are 'investing' in terms of real capital investment i.
e.
£1pp = 100 shares), and treat it as much as you can like conventional investing.
Pick some good growth companies and go long for days or weeks (if you are in a bull trend that is), or vice versa with debt laden companies in bearish periods.
This is more swing trading, or investing, rather than day trading which is very much more like gambling to be honest, especially on the indices.
There are plenty of companies who will let you use demo platforms, and although this isn't the same without real money one can start with just 10p/point with IG Index for example.
But whatever you do control your ego and make sure that your exposure makes sense - you don't want to end up with sleepless nights and no social life.
Source...