When it comes to earning as much as possible from the stock market, everyone has their own strategies. Whereas some rely on a more traditional approach and use market analysis tools, others like to take a more adventurous route and rely on instinct and luck.
This is especially the case with those who enjoy spread betting on asset prices. Simply put, contenders bet on which direction an asset’s price will move, and if the real price follows their estimate, they win some money for each unit of currency that it moves or lose money if it moves in the opposite direction. Not only is this a unique approach, but it’s also illegal in most countries.
If you happen to be in a jurisdiction that permits this investment style, you will still need a regulated broker through which you can place your bids. Before you get into the actual bid though, it’ll help to know what you should look for in a reliable broker.
1. Reputation
Like regular brokers, those that facilitate spread betting can also have varying reputations regarding transparency, reliability, and the level of quality in the services they provide. Ideally, you should be looking for a broker whose authenticity you can verify, they have a good reputation, and you can be confident that people are using their services with no problem. While profits depend on how good your bid was and the market behavior, the quality of the broker is much easier to decipher.
2. Low Stakes
If you are new to spread betting, it will be very helpful for you to start with a broker that offers low stake trades. Unlike regular stock trading in spread betting, you get or lose a fixed amount for each unit of the price that the asset value changes. If you are to compare UK spread betting brokers, you will find that some will allow you very low stakes in your trade. Others have a minimum that is much higher. The higher the stake, the more you can win, but you can also lose just as much. Start small and move higher as you get familiar with it.
3. Demos
Just like regular stock brokerage options, with spread betting, you do have the option to first try it out in a demo account, but not all brokers provide this option. A demo account can help you get a feel of the trading style and better evaluate whether you want to put real money on the line, though it doesn’t reflect your investing skills.
4. Read
Even though it is a bet, you can still benefit from knowing the nature of the asset that you are betting on. If you know the background of the asset, you can make a better decision and still increase your chances of winning.
Even though spread betting isn’t allowed in most areas, it is still incredibly popular in the UK and some parts of Europe. Like any other style of investing, the level of success that you can achieve with this approach depends on how well you are prepared, how skilled you are, as well as some level of luck.
