From MYTS Head Tutor, Phillip Konchar
If you’re interested in financial spread betting and want to learn more about it, then you’ve come to the right place. We pulled together this extensive guide to provide new traders with all the basic information they need to know about spread betting the financial markets.
It contains everything from information on how spread betting works and the markets you can trade – to different bet types and strategies – to answering questions such as “How do traders make money spread betting?” and “Can you make a living from spread betting?”
The following is a brief rundown, chapter by chapter, on what you can expect to learn from reading this guide. When you run across a spread betting topic of particular interest to you, you can just click the link to take you right to that section of the guide.
Part I – Why spread bet?
The first part of the guide gives you the reasons why spread betting has become so popular and explains what has led so many people to get involved.
It also covers the question of “What type of person is spread betting appropriate for (or not appropriate for)?” If you want to get a good idea of whether spread betting is right for you, this section can help you find the answer to that question.
This chapter explains why spread betting has become the most popular form of retail trading in the UK, and explores the many advantages that spread betting offers financial traders, such as the incredibly wide range of markets to bet on, the leverage offered that makes spread betting accessible to even small investors, and the big tax advantages that spread betting offers.
“You can find spread bets on everything from company shares and equity indices such as the FTSE 100, to options, interest rates, commodity futures, and foreign currencies (and, of course, sports!) – even property and cryptocurrencies.”
One of the keys to successful spread betting is having the proper psychological mindset for it. Here you can learn about the primary attitudes and psychological characteristics common among winning spread bettors.
“Being a successful trader takes more than just a solid understanding of the markets. It requires having a personality that, for example, enables you to handle the ups and downs of winning and losing trades, and includes the self-discipline to stick with a trading plan and avoid letting your emotions rule your trading decisions.”
Part II – What is spread betting?
In the second part of our guide, we delve into exactly what spread betting is and how it works. Learn the history of spread betting, which markets you can spread bet, regulation and protections of spread betting, and basic risk management tools you can use in spread betting.
This section walks you through the nuts and bolts of exactly how one goes about spread betting, from opening an account – to understanding trading with leverage – to picking a market, selecting a betting stake size, and placing a bet.
“Spread betting, to put it in the simplest terms, is speculating – by placing a bet – on whether a financial asset – such as a stock or commodity – will increase or decrease, rise or fall, in value.”
Here, we explain the origins of spread betting and why it has become so popular.
“Where the 1980s were lacking for spread bettors, the 1990s and beyond the turn of the century seem almost like they were tailor-made for the successful boom in spread betting.”
Learn about the extremely wide range of financial markets, both domestic and foreign, that are open to spread bettors, including stocks and stock indices, commodities, interest rates, and foreign currency exchange (forex).
“One of the primary advantages that spread betting offers individual retail investors is the ability to make money trading a wide range of financial markets…you can spread bet markets such as foreign stock exchanges, commodities, and bonds, all from the convenience of a single trading account.”
This chapter takes you through the different types of spread bets and orders that you can use in spread betting.
“One of the major advantages of financial spread betting is the wide variety of bets that spread betting companies offer their clients. There are not only a large number of financial markets to choose from, but also different types of spread bets that you can place.”
One of the keys to mastering spread betting is carefully managing your risk. Learn the risks inherent in financial spread betting, such as trading on margin and unexpected economic events, and how to use tools such as stop-loss orders to manage those risks.
“Before deciding to trade, make sure you understand the risks, the market you plan to trade, and how to use the various risk management tools offered by your spread betting provider.”
Sports spread betting is the other half of spread betting that is offered along with financial spread betting.
This chapter explains the difference between sports spread betting and traditional fixed-odds sports betting, and will help you decide whether sports or financial spread betting is for you.
“A traditional, fixed odds horse racing bet is a bet on which horse will win the race, while a spread bet can be on something like the number of lengths the winning horse beats the second-place horse by.”
Spread betting is supervised and regulated by the government. Here you’ll find the important information on which authority regulates spread betting and what financial protections spread bettors are offered.
“In order for a spread betting firm to be licensed and authorised by the Financial Conduct Authority to operate in the UK, it must abide by several key regulations that govern trading firms in the financial services industry.”
Spread betting is all about the spread, so it’s important to understand how spreads are set, how spread bets are priced, and how the spread works.
“To make a profit spread betting, it’s critical to understand how trading costs are built into the spread and how this potentially affects your profit margin on each spread bet.”
Having given you a lot of information about spread betting, we offer some specific spread betting examples to help you more clearly understand how buying and selling in the spread betting markets works.
“In order for your spread bet to be profitable, the price must move enough to overcome the spread. You buy at the higher spread price, the ask price, but sell at the lower spread price, the bid price.”
Part III – How to get good at trading
The final section of the guide is focused on helping you begin to hone your spread betting game, so that you can increase your chances of being profitable, while carefully managing your level of risk.
Key topics covered include common mistakes of beginning spread bettors, specific spread betting strategies, and how to make money from spread betting.
This chapter covers the importance of having a solid trading strategy and how to go about finding a strategy that’s right for you, that suits your personal trading style. It also explains some of the most popular trading strategies, such as breakout strategies and market reversal strategies.
“Using smart spread betting strategies dramatically increases your odds of being a consistently winning spread bettor. Every good, solid spread bettor relies on one or more good, solid spread betting strategies.”
In this chapter, we address the popular question of, “Can you make a living from spread betting?”, providing a realistic answer, along with plenty of practical advice on how to make spread betting your career. Also included are real-life examples of individuals who have made a fortune from spread betting.
“If you plan to make a living from spread betting, then you are, in effect, starting your own business as a spread bettor. As such, you should approach it like starting a business.”
There are a number of trading mistakes commonly made by new spread bettors. In hope of helping you avoid them, here’s a rundown on five of the mistakes most frequently made by new bettors, and advice about how you can avoid falling into these common trading traps.
“If, as a new spread bettor, you can manage to avoid the most newcomer mistakes, that will greatly enhance your chances of being a profitable and successful spread bettor over the long term.”
We’ve mentioned before how crucial managing risk is to profitable spread betting. This chapter goes into more detail on the specific risks inherent to spread betting – the risk of trading with high leverage, the risk of market volatility, and the risk of trading costs – and how to best go about managing them.
“One of the most important factors in putting together a good spread betting game, one that will generate profits for you, is practising careful risk management.”
Revealed here is a list of 10 things you can do before you start spread betting that will make you better prepared to be successful when you start actually betting real money.
“Spread betting is a form of investing, and no one would recommend that you approach investing in the financial markets without any preparation.”
The final chapter will help you out by giving you information on exactly where to go and what to do next in order to get started with financial spread betting.
“Take some time to reflect on spread betting and how you might start approaching the opportunity with the benefit of the information we’ve provided.”
We wish you great success and prosperity as a spread bettor.
So, get started on the road to learning all you need to know about spread betting – Just turn the page and start reading the guide now!
Learn the skills needed to trade the markets on our Trading for Beginners course.