Know Your Market
Before you start spread betting, it is advisable to learn about your target financial markets. You can spread bet on forex, the foreign exchange market; indices, FTSE 100, DAX etc., gold or oil, or bonds.
You can learn about these financial markets by background reading and observing the price movements on spread betting websites. There are a number of informative websites and an array of reading materials around financial markets that can help you make sound decisions and could help improve the odds of you making a profit.
You May Already Know More Than You Think
The movements of the financial markets depends on a number of factors, such as world events, economic data that is openly published, the functioning of national or international politics and corporate events, such as Chief Executive Officer appointments. This knowledge will help to determine the movement of financial markets as it is acted on by traders and other parties. It will help you decide which way you think the market is going; a prerequisite for placing a spread bet.
Opening a Spread Betting Account
Once you have a sense of the financial markets and a confidence in their direction, you might be ready to open a spread betting account with one of the UK’s many spread betting companies. Sites like CleanFinancial do not advise speculators on the best spread betting company; instead it lists a selection of firms with their account features, such as 24-hour trading etc.
You might choose to open a spread betting account with a company that focuses on indices, forex speculation, commodities and bonds. In the UK, spread betting is regulated by the Financial Services Authority (FSA).
Maintaining Your Spread Betting Account
Depending on the spread betting company you choose to open an account with, you may find that your spread betting account is semi-automated, allowing you to set your opening and closing positions; the level you want to buy or sell at.
Some companies, on the other hand, may require you to monitor financial markets and your open positions on a more intensive basis. Although naturally the more you monitor the markets and your positions the better.
The semi-automation, in itself, does not determine the success or failure you may encounter when spread betting. Indeed, one of the most difficult things in spread betting is not necessarily the practical running of an account, but correctly determining the future direction of a financial market.
Before you trade though, note that financial spread betting is a geared form of investment, it involves a high level of risk to your funds and losses can exceed your initial investment. Ensure that it matches your trading requirements as it may not be suitable for all classes of investor. Before trading, make sure that you are fully aware of all the risks. Make sure that you only spread bet with capital you can afford to lose. Seek independent advice if necessary.
Situated in the centre of London’s financial district, Daniel Jones is a seasoned spread betting professional and commentator on some of the leadingfinancial spread betting sites.