Financial Spread Betting: Trading for Profit
In recent year, targeted at the retail market, quite a few different financial products, have hit the financial markets. One of these, that soared in popularity during the last few years, is financial spread trading. A reason for this is that financial spread betting is free of taxes. The profits that you gain from the financial spread betting would be completely tax-free and there is no stamp duty payable either – yes, that’s true! This means that there is no Uncle Sam who will ask you for at least 30% of your gains when the tax year is past.
Some people complain are afraid of delving into the world of financial spread trading having heard so many horror stories. And no doubts, beginners may be put off by the leveraged product but what they miss is that they control the amount of leverage; in fact they don’t even need to utilise the leverage at all if they don’t need to. Spread betting in itself is quite simple to understand; you decide on a market direction and go long or short and stand to make a certain amount for each point move. For beginners to try their trading platforms and familiarise themselves with this trading product without having to risk any real money at all – some spread betting providers even offer demo simulators. A very good way for starters to be introduced to this trading product – that’s what demo accounts and simulators are.
Usually, there are different kinds of techniques and skills that you can use in order to spread trade in an effort to make some hard gains. Some of the systems and strategies are complicated, but others are simpler and some may not even require you to learn how they work; the so called black box trading systems. The problem with these kind of systems is that you won’t know what went wrong if the system starts losing money. Knowing how to utilise stop loss orders as this can help you minimise losses and allow you to survive down periods – is something you must understand, no matter what you do.
Many spread betting providers today also try to attract new clients by offering bonuses and cash back offers. Allowing you to trial a trading platform at the provider’s expense, is what a cashback offer essentially allows, and you should not use such offers as a way to see which providers gets your business. Cashback and bonuses are nice but they are useless to have if you are getting bad execution or you end up dealing with wider spreads.
Increasingly becoming a mainstream trading product, to summarise, is what financial spread betting as a trading activity is doing. Diving into the world of spread betting falsely thinking that its an easy way to untold riches and also making a living from trading and that doesn’t apply for just spread betting but also future, options, warrants, CFDs, securities or any other trading product for that matter, is far from truth & not easy and any such expectations are likely to end up in tears. However, I’d say that over the last few years the market has matured a lot and many investors are now aware of the dangers of margin trading. If you want to increase your probability of success, you definitely want to invest time to learn about the markets and improve your market prediction skills.
Author is an expert on spread betting tips and strategies.
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