As I write this, I’m nursing a small sore head and an empty wallet. Within the last a month I’ve lost almost £30,000 spread betting for around one hour each day five days a week. So I was able to blow around £1,500 an hour. That’s really quite a bit of cash. Actually, it’s not exactly as bad since it looks. Fortunately, I was betting employing a few spread-betting companies’ demo sites. These are simulations of these live betting sites that enable 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 I was able to squander so much money so quickly does pose the question – if spread betting seems really easy, why achieve this many individuals 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 subscribe to, four or five different spread betting companies take full-page colour ads every week, outnumbering any form of advertising. Spread betting ads happen to be common in the commercial sections of many weekend newspapers and will most likely soon start to look in the personal finance sections. Spread betting could appear deceptively attractive to numerous savers. In the end, money in a bank, shares or unit trusts will at best give us about a miserable five per cent annually before tax. Yet a reasonable run on spread betting can certainly allow you to pocket ten per cent per week – five hundred per cent annually – completely and gloriously tax-free. So spread betting can allow you to earn in only one year what it would have a century or even more to attain with most other investments.
Spread betters gamble on price movements of anything from individual shares, currencies and commodities to whole markets like the FTSE, Dax or S&P. It is known as spread betting because the business providing the service makes most of these money by putting yet another spread around the cost at which something has been bought or sold.
It’s tax-free – Whenever 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 the full-time job and only source of income, you can find no taxes to be paid as it’s regarded as gambling. แทงไก่ชนสด
You are able to bet on a rise or fall at the same time – If the FTSE, as an example, is trading at 5551-5552, you can place two bets, one so it will rise and one so it will fall. These only get triggered once the FTSE actually moves. So when it starts rising, your bet so it will rise gets triggered. Similarly when it drops, only your bet so it will fall is triggered. So it could 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 generally the minimum price movement you can bet on), it is simple to win four or five times your original bet if the cost moves in the best direction. On a great bet, you can win much much more.
You are able to wait for the breakout – Prices on many shares, currencies, commodities and other things people bet on tend to have periods of stability accompanied 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.
You are able to adjust mid-flight – With most bets, such as for instance with horse racing or on roulette, after the race has begun or the croupier has called ‘no more bets’ you have to wait helplessly for the result to see if you’ve won or not. With spread betting you can elect to close your bet at any time. So if you’re ahead, you can take your winnings; if you’re behind you can 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 should be pretty easy to produce a fair little bit of money without an excessive amount of effort. If only.
Industry estimates suggest that around ninety per cent of spread-betters lose most or all their money and close their accounts within 3 months of starting. There be seemingly another eight per cent or so who make reasonable amounts of money on a regular basis and you can find around two per cent of spread-betters who make fortunes. I’ve been to some presentations run by spread betting companies and at one of these simple 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 if they win, they can increase their wealth.
The companies want you to get rid of – When you initially open a demo or real account, you can get several calls from extremely friendly and helpful teenagers and women at the spread-betting company asking if there’s anything they can do to aid you to obtain going. This is customer care at its very best. Most of the people contacting you’ll 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 need one to win while the more you win, the more you’re more likely to bet and the more the spread-betting company will earn. This may make you feel good, convince you that the business is open, honest, trustworthy and supportive and encourage one to use them for your betting. But it’s also a lie. It’s true that the business will make lots of its money from the spread. However, with many of one’s bets, you’re betting against the business and so they hope you lose, big time. Actually, over the past month I’ve seen several companies change the conditions on the sites to create it much more likely that folks 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.
It’s difficult to break even – In the event that you bet say £50 a pip and the cost does go how you want, the spread betting company takes the initial £50 you win. So the cost has to maneuver two pips in the best direction for you really to win your £50 back and three pips for you really to emerge with £100, doubling your money. However, 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 in four times your original bet.
Losses may be massive – With most gambling, you can only lose that which you put down on a horse, blackjack or roulette. With spread betting you can quickly bid farewell to much more than you wager. I forgot to place a stop loss on one bet and managed to get rid of over £800 with just one £50 bet. Because your bet is leveraged, you may make both fabulous gains and excruciatingly painful losses. Too often it’s the latter. The small size of many 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 first bet that they realise the chance they have taken.
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 could normally cost (we were told) £6,995, but there is a unique offer for the initial five individuals to sign up of only £1,997. There are many such courses and also gurus offering to sell you their special spread-betting systems, guides, webinars and a variety of other advice. With so many supposed experts apparently making an income teaching others how to spread bet, there has to be lots of takers. But I’ve found that you have to know and more is available free on the Internet. Together specialist said, ‘Don’t bother wasting your hard earned money on ‘Guru’ books written by so-called experts. Those books are crap and not worth the paper they’re printed on. Nobody sells a key trading methodology if they are really successful. The only reason these guys are writing books is really because they didn’t allow it to be as traders’ ;.