A lot of people with a day job have taken resort to forex trading as their second income. Now, if you want to earn some quick money by this mode, then you need to indulge in spread betting. If you are wondering that “what is spread betting”, then you must know that it is basically a kind of speculation. In this the bet is placed on the change in the price of a security. In case of a spread bet there are mainly two prices quoted.One is the bid and the other is known as the spread or offer. As an investor, you can bet whether the price of the stock will be lower than the bid or higher than the spread price.
Here are 8 important points about spread betting that you must know about before making it as your second income.
As a newbie, such platforms might be difficult to navigate. You will be surprised to see just how much money people will lose out when they undergo betting’s, initial few bets are important. Take these as a practice platform and place small stakes. This way, you will safeguard yourself from running into huge losses.
Change your trade quickly
When you are trying your hand in betting , you should be able to monitor and change your stance quickly. If the risk is high start with baby steps and then slowly once you start to gain, increase your momentum. In short, you should be agile in your trade movements.
Look out for hidden costs
When you are trading there are various costs involved. Nut, there are some platforms likeETX Capital, which don’t charge anycommissions on spread betting. But there are other platforms that charge a hefty commission and also has a plethora of hidden charges levied on your trade. Such charges actually cut into your profit share.
Making profit is not winning
When you are betting in the forex market, you need to understand that profit does not always mean winning. It is a game of averaging out. So, you should ideally not monitor daily wins and losses and rather watch out for the average result to determine if over all you have made a profit or incurred a loss.
Save your financial life
One of the mantra’s to having a good financial life is to curtail your losses. When you indulge in forex betting and win a few deals it is like tasting blood. You end up getting addicted to it. At times, even heavier losses might not be able to hold you back. You need to know when to stop your track and stop your losses.
One of the characteristics of a good trader is to invest in good options and stay put. You must understand just as picking good spread price is important, similarly holding on to the same till the correct moment is also equally important. A lot of traders who have made money by betting will relate to the same.
Limit your specialization
Try not to be a jack of all trades and master of none. When you are opting to spread betting, ensure that you specialize in only a few stocks alone. This would aid you in the long run. You pick 2 or 3 stocks and specialize in them alone. It means you only need to keep yourself abreast with the happenings of these 2 or 3 currencies alone.
Be mentally strong
You need to understand that spread betting is both a game of money as well as mind.It is important that you are mentally strong also. Your mental health will come into play when you try and restrain yourself from giving in to temptation and turning greedy.