Is Spread Trading Gambling?

My wife is still giving me grief saying I am nothing but a “gambler” and questioned me last week (again) as she applied for internet banking and our joint account showed dozens of Debits and Credits for the last few years with the turnover of my account just on spread betting runs into £100,000’s….. but fortunately I showed her the last 3 months and happy days!

Financial spread betting can be exciting and rewarding

Financial spread betting can be exciting and rewarding, but only if you have taken all the necessary precautions and also have fully researched and be accustomed to how it operates. One of the most important requirements would be to understand you must have a very good money management system in place. This can protect your investments so that when you make profit, you do not lose everything or more. Money management is required long term and should be carefully followed.

Many profitable and successful traders have stated that the good a part of their success in spread betting is they have developed and stringently follow certain management of your capital techniques, by which they will set a particular percentage of their capital his or her maximum loss value.

Many successful financial spread betting investors utilize the ‘Fixed Percentage Rule’. This basically states that you are going to take a certain percentage of the capital and allocate it for each of your bets. It’s been stated on many investment websites that 2% is the most widely used percentage. It might not necessary be what you are comfortable with, however, it can be used as a basic starting place. There are various approaches to using this method.

There are generally two key questions that must definitely be answered to some satisfactory level. These can help determine what percentage of your capital you are most comfortable with risking in the event you sustain losing positions.

1. What is the largest amount which I can invest that will keep within the range I have set in my risk management plan?

2. What portion of my current spread betting capital should I stake on my next trade that is keeping me within my current money management strategy?

Once these questions have been answered sufficiently and you are ready to open your spread betting positions you have to then make a firm decision your positioning sizing. Essentially this means that you need to be sure that in the event of a losing position your stake isn’t any more then what you have decided upon as the maximum loss.

Even after you have done all your historical research, and you’ve got followed the trends and pinpointed which areas and products you wish to begin spread betting upon, you have to remember that profiting is only half of the equation. The partner is maintaining increases or profits over a period of time. Structured money management is required long term.

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