Spread Trading - Dispelling The Misconceptions

So many financial traders are really put of by spread betting essentially because it has got the word "Betting" in the title. People associate the word betting with bookmaking and any financial trader is not a gambler. They take calculated risks which is under no circumstances bookmaking. Well you know what, sugar coat it just as much as you want but whenever 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 edge over the 50:50 win lose odds that you would have when you just trade at random. Yet like it or not there is absolutely no way that you may 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 no such thing nor will there ever be one. The holy grail spread betting strategy does not exist fact.

The thing is there is actually no reason to be discouraged by the word "betting" inside the phrase financial spread betting. There is not any reason you simply cannot utilize financial spread betting as part of a well though out investment strategy. In reality the use of a spread betting account in almost any good investing strategy is an extremely wise move. Spread Betting is at present free of any form of Tax in the UK and therefore you get to keep every penny of the profit you make. The only fees that are involved are those in the slightly larger spread and the cost of rolling rates if you take out a rolling daily bet. It depends on your bet size however if your keeping it small it's pretty much cheaper than trading via an ordinary stock broker. The added spread and rolling costs are how the spread betting companies make the majority of their revenue, but hey they have to turn a profit or we won't have the option to trade with them.

It's also generally believed that spread betting organizations want you to lose because this is part of how they get their profit. While there might be some truth in the fact that sometimes when you lose they make money the majority of their earnings is from the spread and rolling fees. I think that when you place a trade, an expert trader will take a view with regards to 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 win they may place the trade on the open market to hedge your position. If and when they think it has the chance of losing they could take the view to not hedge the trade with the opinion that they will make money from your loss. Needless to say when the spread betting firm does this they take a chance as the position could easily turn into a profit and they must pay you what you will be owed from their pocket.

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