More than 80% of day traders lose money. Why do you think spread betting is tax free? Perhaps it has something to do with the HM Revenue & Customs not wishing to have all spread betters reclaiming their losses…
This is a bit of a rude view in my opinion. What makes taxi-driver think they can trade Forex? Well, what makes you think they can’t? I have met a guy who had 8 figure years trading bonds yet if you asked him to value a bond he probably couldn’t even tell you what it was. If you can trade you can trade – it doesn’t matter if it was a bond, stock, Forex or even cars. You ‘see’ things.
“Use leverage sensibly. If you can’t afford to take up an equal physical position, then you probably are overgeared. And don’t utilise spread bets as a substitute for your overall investment portfolio as spreadbets are ultimately just an instrument of (and a reflection upon) a share price. “
Don’t be so quick to write people off – don’t forget Terry Crawley started as a carpet fitter before taking over £30m out the markets.
Parting Note: Someone close to the industry once told me that 6 months is the average time that a spread betting account remains open before the punter gives up or switches to another spread betting provider. Day trading currencies or commodities is inherently tricky and there is NO FOREX SYSTEM that will turn a thousand pounds into a million dollars in a year, safely. And I think that’s what most people want, and so they bomb their accounts out in the first 3 trades.
Overall, spread betting is a fantastic tool providing a lot of opportunities to make a lot of money. However it is also a very easy way to lose a lot of money.
NEVER, EVER USE MONEY TO SPREAD BET THAT YOU CAN’T AFFORD TO LOSE. NEVER EVER BORROW MONEY TO SPREAD BET. Please trust me on this. You might be after big profits quickly but I guarantee you that you will lose your money fast and end up in a nightmare position making bad decisions brought on by irrational/emotional thought. You want to be calm and confident when placing a trade, having considered both the upside and downside potential – always remember the price may move in the opposite direction to what you think – so if the worst happens, are you ok with losing your stake? Why not start by saving up £1000 then making a number of small £50 trades. Sure it’s not as exciting as the big money, but just think, if you’re successful, you might double your money to £2000. This shows that you might be on to something. Do it again, double to 4k. Double it 8 more times and you’re a millionaire. Risk management is key. If you are a natural gambler, spread betting is probably not for you.