T2W Trading Community

‘Your account’s open, but what next?’

Imagine you’ve opened your account, you’re fuelled up and excited by the prospect of making considerable tax-free profits, and you go on line for the first time. Although you understand the principles of spread betting, it still looks confusing, perhaps even bewildering and downright scary!

We’ve all been there. It’s frightening to realise that for the first time, YOU are in total control of the X amount of cash with which you’re willing to speculate, entirely dependent on YOUR OWN decisions and skills at analysis of financial data. Now it just sounds too daunting for words. Quick, phone up the broker, mind the cat, cancel everything and carry on working 9 to 5 the rest of your life……. sigh…… STOP!

Does all this sound familiar? You have seen the adverts, the words TAX FREE resounding in your head; you may have read many of the posts on forums, seen the relevant news articles and no doubt been bombarded by junk mail that offers you “£400 per week from sitting on your toilet, lying in bed, or comatose in the garden”. You get the idea. You then asked for a very glossy, very persuasive information pack from one of the brokers, who then explained it all in relatively simple terms, though perhaps some were a touch technical. Subsequently you now have an account and are raring to go.

But where do you start? Into what markets are you best dipping your toes? How does it all work, really?

Well, in this article I will take you through some of these questions and many more. You see, many moons ago, I was in the same position as you. Since then, after I recovered from the shock of watching my margins go down the tubes, I decided to learn all I could about the markets. I now trade, like you, in spread bets; I also teach new and intermediate traders how to trade successfully, by way of my own company (www.insightsupport.com). Yes, I admit that was a plug, but hey, it’s the law: apparently you have to slip one in somewhere! A lot of what you will read is from my own experiences while some is actually taken from my training courses. Nothing in the following article will cost you a single penny. I am a great believer in making sure that people understand the basics, at the very least, so we all start from the same place. If you think I am teaching some of you to suck eggs, then great! It won’t hurt for those that already think they know to have some revision.

Financial spread betting

There's been a great deal of negative talk about financial spread betting over the years. Sadly the media coverage and many of the rumours have been blown out of proportion. As a result, many people decide not to look at financial spread betting as an option, let alone as a real chance to add to their current income or indeed in some cases replace it as much as 10 times over. Therefore I think I should begin with dispelling a few myths that seem to be running around and that I have heard mentioned here and there, mainly started by people who know nothing about it and seem to me to be incredibly ignorant.

Myths:

Nobody wins at financial spread betting!

Well if that was the case then nobody would do it, least of all the major institutions. If people weren't making serious money then there wouldn't be a market for it, indeed a market that is growing at an incredible rate. There do have to be winners and losers, else the whole concept wouldn't work. Current estimates show that almost 90% of those that 'play' (we’re not playing) the financial spread betting markets lose their deposits or close their accounts within 3 months. The fact is that 90% of people who become involved with financial spread betting do so without any real plan. They just blindly throw their money into anything that seems to be going up or down (mostly up) and foolishly believe when they're losing money that the tide will turn so add more money to it, or trade the opposite direction. That in it self is a real losing strategy in my eyes. There are sensible ways of what is called 'hedging', but don't do it blindly to recoup a loss. Before they know it they have lost their deposit, return to the pub and complain that it's all a con.

Now this is where it gets interesting. Given the fact that a large percentage of spread bettors are losing their deposits, we move to the 10% who don't and in fact make all the money the other 90% are losing. Sounds very cut-throat and I suppose there is no other way to describe it: someone is profiting simply because someone else is losing. You are profiting and you will do (not to forget you will have losing trades too) because you are in the 10% who have a real trading strategy and not some toss of the coin investment technique. So take heart in the fact that what you have wisely invested in as regards this guide will arm you very well, in order that you can make educated choices and not trade blindly.