5 Reasons NOT To Start Spread Betting the Financial Market.

Spread Betting in simple terms is a platform aimed at the financial markets which allows you to trade on price movements. YES, Spread betting is a glorified educational form of gambling on the financial stock exchange. Spread betting in the UK is tax free. The Risk and Reward profile for this financial instrument is extremely high. You can easily turn your existing capital into multiple folds in a single trade. Equally you can lose your entire inheritance or wealth in a single trade if you forecast the market wrongly.

Yes, there are more and more young people making their first million at a very young age from spread betting, futures and options on the financial market. I have a two neighbours who have consistently rack in an average of 2K tax free money a month simply from spread betting on their mobile phones.

Remember Winners always tell everyone their success stories. Big losers will not disclose their embarrassed defeat and losses. Imagine losing 2k in a month which is equivalent of your monthly house mortgage!

In all honesty, this article is publish to put off beginner and learning investors away from Spread Betting. Personally I do not think it is worth the risk as you can lose your entire capital very quickly. This capital is basically your hard blood and sweat cash obtain from long hours of work and losing it all is too painful to bear.

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1. Spread Betting is very disruptive to your day job.

Previously I have  provided guidance on how much time you need to spend on your financial investment. With mobile phones and abundance of 4G data, its very easy to keep up with spread betting to the very minute. Trust me, spread betting s very disruptive at work. You will end up staring at your phone all day while at work which would be obvious to your colleagues and superior. There have been people losing their job on these addiction.

Spread betting will not replace your day job and pay your mortgage or bills consistently. If it does then perhaps you are doing the wrong job. A football match bet is only active for 90minutes for players on field. However spread betting can be 24/7 of monitoring when you are watching the currencies and indexes.

Not only it will disrupt your day job, but also your time at home especially if you have a young family.

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2. Mood Swings

I have personally witness a work colleague throwing his phone out the window because of a massive loss from spread betting. I was glad he did not jump out the window. It was the day he shorted the market after news of North Korea missile launch into the pacific ocean. On the day of the market open, everything was on the rise as the market was already immune to the news of the North Korean dictator.

Yes, mood swings are develop which could affect your social interactions and performance at work. In spread betting you can always put in limits and stop losses trigger to avoid huge losses of your capital. However you can always adjust your stop losses in mid-game to if the market is going against your favour. Many players have lost big time where they consistently pump in money to keep their margin up so that they don’t get cut out and merely hoping for the massive turn around.

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3. Season Gambler Addiction

A season gambler is defined as a player who have won loads and also lost tonnes in their lifetime. To be able to keep calm and win a lot of money on a poker table, you must have had experience losing the equivalent amount of money previously.

Same applies to Spread Betting players. If an experience better tells you he has won 30k in a month, that simply tells you that he previously had experience a 30k loss or more. He has learned his expensive lesson, tweak his strategy, with a hint of luck he manage to turn his fortunes around.

So are you an experience Gambler? If No, then don’t even consider this game.

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4. A large Sum of Capital required

In gambling the amount you deposit is the amount you can bet on. Spread betting is different because when you place a bet at 10% of your capital you could lose the extra 90% if you did not put a stop loss limit on the bet. For example Amazon is sitting at 1000.0 points and you put 10 pounds a point on your 100 pounds capital. If end of the day Amazon drops ten points your entire capital is wiped out. Hence you need a large capital for a safe margin.

The other frustrating point is also placing a limit win amount. Example, you may be in a 1000 profit on amazon at 10 pounds a point. You put a limit win when your profit hits 1200 pounds. Two hours before end of trading, there was news release on hacking scandal, the market reacted and drop to negative zone. You loss 500 due to your stop loss. You kick yourself for not capturing the profit at 1000 pounds, simple because we are all greedy human beings!

5. Start Investing and Not Betting

The whole point of investing money is to inject cash into a financial market instrument to generate cash while you sleep. This means, initial depth research, shares purchased and forget about it for long time. This way you allow your cash to hopefully generate more cash via growth or/and dividend yield. You can carry own with your day job and spend time with your family.

Spread Betting is way worse than online gambling or casino gambling. The earlier can be done in your hands anywhere 7 days a week as long as you have internet connection.

A good investor spends most of his time reading books, journals, articles and news. With the information you can convert into knowledge by discussion with peers and hopefully educate less experience investor. Betting spends all day trying to analyse trends of the market which is largely driven my computer software via coded instruction which does not have any relevant science and justification behind the movement.

Final words: We are not fund managers or billionaire who can drift the market up or down. Consumer spread betters are just merely fleas trying to make a small living in the big open world. We have only 24 hours in a day and we should choose a path which maximise our income.

 

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