A quick guide to betting on the markets (Spread Betting With Shares)

Member Name: iamasadlittleboy

Product:	Spread Betting With Shares
Date:	09/02/08 (186 review reads)
Rating:

Advantages: Tax free, Gambling gives you such a rush (thats bad right?)

Disadvantages: Can make massive losses.

Spread betting, or trading, call it what you will, an investment or a gamble, it's not really any better than us sports gamblers, or even poker players. You can lose a lot (as the news has recently lead us to see, a lot can be £3 Billion), by not knowing what your doing, admittedly the banker wasn't spread betting, but was effectively betting on the futures market, which is similar (but instead of buying/selling share prices he was buying/selling futures).

So how does spread betting work? Well the bookie (or the trader, in most cases with financial bets) will offer you a buy, or a sell price, a hi or a low if you'd rather see it that way. You will be in profit if it turns out to be which ever way you go. For example you may "buy" shares in Morrissons at a spread of 120-125, and you may buy £10 of them.
What this means is for every penny rise in the share price over 125, you earn £10, nice and easy right? Well no, not exactly, for every penny that it drops beneath 125 you lose £10 (often set to a stop loss, to prevent losses of £125,000 in this case), of course you can (with many traders) stop the bet when you've taken so much losses manually.
Of course in the above example, if you wanted to "sell", you'd sell at 120, and for every penny the share drops beneath 125 you'd earn £10 and vice-versa.

As you can see you could effectively earn a fortune, or opposingly, lose a fortune if you didn't know what your doing (so don't take this quick guide with more than a grain of salt), so read up on it properly before you do it. I cannot stress this enough.

Although I've never actually spread bet with market's, I have spread bet with sports, and found it to be incredibly fickle and not the easiest market to judge whats going to happen. I'd much rather green up on in play football on betfair (as it's easier to do as long as your doing 1 game at a time), but if you know enough about the markets (or even futures) you could stand to make a lot of money very easily (a woman I used to work with had a family member who'd earned £50,000 in 6 months on these).

As with all gambling, you need to realise when it's a problem, you need to of course not chase losses (yeah I've proven myself to be a hypocrite here many times over), stick to a system (if nothing else it limit's losses) and make sure you know what your betting on.

If you need any questions answering about betting in general, feel free to ask, or check out the excellent olbg forums at http://www.online-betting-guide.co.uk/forum/ who will be more than willing to answer anything about gambling in general.

One more thing, any profit you may make is tax free, which is why some people deem this such a way to make a living.

On epoint about spreads before I finish, the bookie will take the maximum for a stop loss account, out of your account at the time of your bet, this is worth a note.

Summary: Betting on the markets is for some, but not me.