Whilst spread betting is considered to be one of the best ways of trading forex, it’s also fraught and risk with danger.
This has been borne out by a study conducted by the Financial Conduct Authority (FCA), which found that 82% of traders lost money on associated spread betting products known as contracts for difference (CFDs).
With this in mind, you’ll need to tread carefully when spread betting to ensure that you optimise your chances of achieving success. Here are some steps to help you on your way:Assess Your Financial Situation
At its core, spread betting is a financial enterprise, and one that’s reliant on your ability to manage capital and deploy it wisely.
As a result, you’ll need to assess your current financial circumstances before you commit to spread betting, to ensure that you’re able to fit this into your life and regulate precisely how much you’re willing to trade with.
Given the aforementioned risk of losing your hard-earned cash, this also allows you to create a viable budget based on the amount of money that you’re able to lose on a monthly basis.
This should be part of a detailed risk-management strategy, and one that’s based on your unique personal circumstances.
Approach Spread Betting Like a Business
Given that spread betting is a strategic discipline that requires a sustained investment, it’s also important that you approach this pastime like a business.
You should adopt this approach even if you don’t intend to make spread betting your primary source of income, as a key aspect of business planning is the identification of risk and the creation of measures to negate tangible threats.
This helps you to minimise losses and optimise profitability over time, and this objective remains central to any prospective business venture.
- Find a Viable Spread Betting Provider and Broker
No matter how much knowledge you accrue pertaining to spread betting, you’ll need to work with a reputable and accredited broker to trade the markets effectively.
This involves comparing the market to find the best available broker, and it’s important that you identify operators who are fully licensed by the FCA and capable of providing a comprehensive suite of analytical tools to traders.
At the same time, you should prioritise brokerage platforms that offer you access to a demo trading account and various risk management measures, as these features enable you to hone your carefully cultivated strategies and minimise future losses as an investor.