Financial Spread Trading - Removing Any Misconceptions

 

 Numerous financial traders are really put of by spread betting simply because it has got the word "Betting" in the title. People associate the word betting with bookmaking and any financial trader is just not a gambler. They take calculated risks that is definitely not bookmaking. Well you know what, sugar coat it as much as you want but when you trade the financial markets via shares, CFDs, ETFs, options or some other financial instrument, like it or not you are without a doubt bookmaking. Alright so you may have a strategy which gives you an upper hand over the 50:50 win lose chances that you would have if you just trade randomly. However like it or not there is absolutely no way that it is possible to predict with 100% accuracy the direction or depth in which one particular market or stock will move. Anyone that says that they have a 100% guaranteed system is a bare faced liar. There is absolutely no such thing nor will there be one. The holy grail spread betting strategy does not exist fact.

The thing is there is really no reason to be put off by the word "betting" within the phrase financial spread betting. There is absolutely no reason you simply cannot utilize financial spread betting as an element of a well though out investment plan. The fact is the use of a spread betting account in any good investing plan is an extremely wise move. Spread Betting currently is free of any form of Tax in the UK and therefore you get to keep every penny of the profit you make. The only costs that are involved are those in the slightly bigger spread and the cost of rolling costs if you take out a rolling daily bet. It depends on your bet size but if your keeping it small it's in fact cheaper than trading via an ordinary stock broker. The additional spread and rolling costs are how the spread betting companies make the majority of their income, but hey they need to turn a profit or we won't have the ability to trade with them.

It's also widely believed that spread betting companies want you to lose because this is part of how they earn their profit. While there might be some truth in the belief that sometimes when you lose they earn money the majority of their profit is from the spread and rolling charges. I imagine that when you place a trade, an expert trader will take a view regarding whether to place the trade on the open market as well. If and when they think it's a good trade and there's the chance you will make a profit they may put the trade on the open market to hedge your position. When they think it has a chance of losing they might take the view to not hedge the trade with the opinion that they will gain from your loss. Needless to say when the spread betting firm does this they take a chance as the position can easily become a profit and they need to pay you what you are owed from their very own pocket.

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