As I write this, I'm nursing a small sore head and a clear wallet. Within the last few one month I've lost almost £30,000 spread betting for around an hour or so a day five days a week. So I managed to blow around £1,500 an hour. That's really quite a piece of cash. Actually, it's not exactly as bad since it looks. Fortunately, I was betting using a few spread-betting companies' demo sites. They are simulations of these live betting sites that allow you to practice before you begin betting with real money. I realise that I'm no financial genius otherwise I could have been rich long ago. However, the fact that I managed to squander so much money so quickly does pose the question - if spread betting seems very easy, why achieve this lots of people get completely wiped out extremely quickly?
We're increasingly seeing advertising for spread betting in investing and money management publications. In usually the one I contribute to, 4 or 5 different spread betting companies take full-page colour ads each week, outnumbering any other type of advertising. Spread betting ads are actually common available sections of numerous weekend newspapers and will most likely soon start to appear in the personal finance sections. Spread betting could appear deceptively attractive to numerous savers. All things considered, profit a bank, shares or unit trusts will at best give us about an unhappy five per cent a year before tax. Yet a reasonable operate on spread betting can simply enable you to pocket ten per cent per week - five hundred per cent a year - completely and gloriously tax-free. So spread betting can enable you to earn in only 12 months what it would take a hundred years or even more to achieve with most other investments. UFABET
Spread betters gamble on price movements of anything from individual shares, currencies and commodities to whole markets such as the FTSE, Dax or S&P. It is known as spread betting because the company providing the service makes most of these money by putting one more spread around the purchase price where something is being bought or sold.
Spread betting appears to have many advantages compared to traditional investing:
You don't have to purchase anything - It enables you to bet on price movements without having to purchase the underlying assets - shares, commodities or foreign exchange.
It's tax-free - Once you buy or sell shares, get paid dividends or receive interest from the bank you will have to pay taxes like stamp duty, capital gains and income tax. Unless spread betting is your full-time job and only source of income, there are no taxes to be paid as it's considered to be gambling.
You are able to go long or short - Once you spread bet you are able to gain equally as much whether prices rise or fall, providing you with guess the direction correctly. With most other investments, you'll need the purchase price to go up when you make a profit.
You are able to bet on a rise or fall at exactly the same time - If the FTSE, like, is trading at 5551-5552, you are able to place two bets, one that it will rise and one that it will fall. These only get triggered once the FTSE actually moves. So if it starts rising, your bet that it will rise gets triggered. Similarly if it drops, only your bet that it will fall is triggered. So it may seem that, come rain or shine, you'll probably win.
Huge leverage - In the event that you bet say £50 a pip (a pip is usually the minimum price movement you are able to bet on), you can easily win 4 or 5 times your original bet if the purchase price moves in the proper direction. On an excellent bet, you are able to win much much more.
You are able to await the breakout - Prices on many shares, currencies, commodities and other items people bet on tend to experience periods of stability followed by bursts of movement up or down, what spread-betters call 'the breakout' ;.You are able to place a bet that's only activated once the breakout comes.
Loss limits - You are able to put conditions in your bet that prevent your losses exceeding your chosen level should your bet happen to be wrong.
You are able to adjust mid-flight - With most bets, such as with horse racing or on roulette, once the race has started or the croupier has called 'no further bets' you have to attend helplessly for the result to see if you've won or not. With spread betting you are able to elect to close your bet at any time. So if you're ahead, you are able to take your winnings; if you're behind you are able to either cut your losses or wait in the hope that things will change and you'll be up again.
Given all these properties of spread betting, it must be pretty easy to create a fair little money without an excessive amount of effort. If only.
Industry estimates declare that around ninety per cent of spread-betters lose most or all their money and close their accounts within 90 days of starting. There appear to be another eight per cent roughly who make reasonable levels of money on a typical basis and there are around two per cent of spread-betters who make fortunes. I've been to a couple presentations run by spread betting companies and at one of these the salesman let slip that over eighty per cent of his customers lost money. Even many professionals lose on about six bets out of every ten. But by controlling their losses and maximising their returns once they win, they are able to increase their wealth.
Why it may go horribly wrong
There appear to be several reasons why spread betting is so capable of dramatically demolishing most practitioners' wealth:UFABET
The companies want you to reduce - When you first open a demonstration or real account, you will get several calls from extremely friendly and helpful teenagers and women at the spread-betting company asking if there's anything they are able to do to help you to obtain going. That is customer support at its very best. Most of the people contacting you will parrot the line that they just want to help and that they're happy if you're successful as their company only makes money from the spread. Some will reassure you that they want one to win because the more you win, the more you're prone to bet and the more the spread-betting company will earn. This may make you are feeling good, convince you that the company is open, honest, trustworthy and supportive and encourage one to utilize them for your betting. But it's also a lie. It's true that the company will make plenty of its money from the spread. However, with many of one's bets, you're betting against the company and so they hope you lose, big time. In fact, over the past month I've seen several companies change the conditions on their sites to produce it more likely that individuals using them will lose. So, lesson one - spread betting companies aren't your friends. The more you lose the more they win. It's that simple UFABET.
It's difficult to break even - In the event that you bet say £50 a pip and the purchase price does go the manner in which you want, the spread betting company takes the initial £50 you win. So the purchase price has to maneuver two pips in the proper direction for you to win your £50 back and three pips for you to emerge with £100, doubling your money. If the price moves three pips in the incorrect direction, you lose your original bet plus £50 a pip, giving a complete loss in £200, a loss of four times your original bet.
Losses may be massive - With most gambling, you are able to only lose that which you pay on a horse, blackjack or roulette. With spread betting you are able to quickly leave behind a great deal more than you wager. I forgot to put a stop loss on a single bet and managed to reduce over £800 with just one £50 bet. Because your bet is leveraged, you can make both fabulous gains and excruciatingly painful losses. Too often it's the latter. The little size of numerous bets, often £5 or £10 a pip can lull betters right into a false sense of security. It's only once the losses go five to ten times the original bet that they realise the risk they have taken.
"The spread betting leverage implies that you may get rich which is a wonderfully appealing idea, but inaddition it means you may get poor which most people ignore."
You are able to waste thousands on courses and systems - At one free spread-betting seminar I attended we were more than strongly encouraged to sign up for a two-day weekend course teaching us how to spread bet successfully. This will normally cost (we were told) £6,995, but there clearly was a special offer for the initial five visitors to sign up of only £1,997. There are many such courses and also gurus offering to offer you their special spread-betting systems, guides, webinars and a number of other advice. With so many supposed experts apparently making an income teaching others how to spread bet, there should be plenty of takers. But I've found that all you need to know and more can be obtained free on the Internet. As you specialist said, 'Don't bother wasting your cash on 'Guru' books published by so-called experts. Those books are crap and not worth the paper they're printed on. Nobody sells a secret trading methodology if they are really successful. The only reason these guys are writing books is basically because they didn't make it as traders' UFABET