What kind of investors or traders do you think should consider spread betting?

Unfortunately, many novice traders are attracted to spread betting by slick advertising campaigns, free trading seminars and promises of instant riches from trading system sellers. Yet spread bets are not get rich quick products.

In fact many people who have dealt in margin traded products say that beginner investors should start with share trading. These products do not suit traders or investors that are risk averse or conservative in their investment style.

Is Spread Betting for You?


Who Spread Bets?

From what I’ve picked up on over the years, most who get into financial trading are self-taught and very few come from financial backgrounds. We have students, PAYE employed, self employed, various business owners, various professionals and retired. We are a social, political and racial mixture. I think its a fairly level playing field regardless of background (as it should be).

Spread betting clients broadly speaking fall into two camps

1) People who do it for fun
2) Serious traders (or people who consider themselves to be such)

Examples of a cross-section of clients from the public we have encountered who spread bet include: Doctors, barristers, solicitors, accountants, dentists, vets, a psychiatrist, Chief Executives of an IT company, a logistics company and a plastics firm, IT consultants, a manager of a greyhound racing track, a fish and chip shop owner, a farrier, shop keepers, restaurateurs, chemists, a school teacher, a chauffeur, a kennel owner, a taxi driver, a driving examimer, a book keeper, a hospital caterer, a housing welfare officer, a film camera man, a kitchen installer, a livestock dealer, an oil rig worker, a bureau du change worker, an insurance salesman, pilots, a chiropodist, a postman, a graffiti remover, a minor aristocrat, a tennis coach, a roofer, an owner of car repair shops, a policeman, a student, a factory worker and farmers – in other works people from all sorts of work backgrounds!

If you don’t have an appetite for risk, or a willingness to do sufficient homework to help mitigate the risk, you really have no business trading – anymore than you should invest with money you can’t afford to lose! By definition, any investment that can turn pennies into pounds can also turn pounds into pennies if you aren’t careful.

“Spread betting is definitely not suitable for everyone. Have said that, whether spread betting is right for you or not, is entirely up to your circumstances. That’s, frankly, for you to figure out. All the same, many people will tell you that spread betting is ‘only gambling’ and that so called ‘real traders’ don’t spread bet, while they conveniently forget that financial spread betting started only as a way for so called ‘real’ traders to place bets on the side – which over the years, grew into the dynamic and ever evolving industry we see today. So it was with partial thanks to the needs of real traders that we even have a spread betting industry today.”

Are spreadbets right for you?

In reality spread trading (or indeed *any* other form stock market trading) is only possibly a “fair” option if you are able, hand on heart, say that you can afford to lose your account balance without this negatively impacting your life.

You would do well to consider trading via spread betting if:

  • you have past trading experience
  • you are used to trading in volatile market conditions, and
  • you can afford to lose all of, or more than, the money you put in.

It would be difficult to bracket spread traders into one single section nowadays as new traders today originate from different backgrounds with different levels of experience, however it would be fair to say that the largest cross section of provider’s clients are retail. With the growth in the spread betting market, brokers are now dealing with everyone from beginner investors to highly active traders. The offering has to be very broad these days because the range of traders and investors is very broad.

Is trading right for you?

We’re going to be perfectly blunt. Spread betting or trading for that matter are not for everyone. Ask yourself these questions:

  1. Are you willing to do what it takes to start your own business properly and then maintain it?
  2. Are you willing to be open-minded and accept new concepts in trading?
  3. Are you willing to change habits that are destructive to your business (and destructive to your life in general)?

If you answered ‘NO’ to any of the above questions, then perhaps you should think twice before getting into the trading world.  You’re just not a match.  But if you fit the profile (you answered a sincere ‘yes’ to all of the above), then trading may be right for you.