To the untrained eye the terms of ‘day trading’ and ‘spread betting’ could intimidate or even frighten prospective investors, but in reality it’s a great deal simpler than it at first appears.
For those who are well used to act of ‘spread betting’ in sporting terms, the logic works in the same manner. Basically when ‘spread betting’ you are backing the outcome of an act, in this instance, a ‘trade’. And the size of profit, and loss, is predicated on the differential in play.
So for instance if you may back a foreign exchange currency market, Forex, to go up by 3% over a fixed period. If the currency fluctuates beyond that level then you would pocket a sum for every fraction beyond that.
Similarly if the market didn’t go to this level, and fell in the opposite direction then you would lose accordingly.
The act of betting above an increase is commonly referred to as ‘going long’ and if you were backing a decrease then this is known as ‘shorting’.
This is the specific element that separates spread betting from the more commonly used ‘fixed odds’ betting that is common across other betting markets.
In fixed odds betting you are constrained by the odds offered on an outcome whereas in spread-betting you retain more overall control, and on the whole you have more control over the amount you can win, or lose, from the initial investment you make.
There are many benefits to this form of investing, especially if you have the knowledge and insight into a relevant market, and therefore can make large sums from your well informed opinion.
Another bonus from such betting activity is the fact that this form of investment is tax free and there are thousands of possible markets to get involved with. These can vary from shares, forex and options, all the way to all sorts of commodities in a large number of verticals.
Remember also that this type of betting is available 24-hours a day, with markets across the globe opening and closing at any given time, offering you an unlimited number of potential markets to plunder.
Another exciting aspect of day trading is that the more experienced you get, the more you can profit from that wisdom you’ve acquired. By paying close attention to the relevant markets you are interested in, you begin to get a grasp of how to best ‘play’ the system.
While it’s often very daunting to first get into the day trading world, it doesn’t take long to work out just how things move and in time you can put together a highly profitable portfolio which could stand you in good stead as you look to make the most of the sums you are comfortable putting into the investment from day one.
Clearly, as with any form of betting, you should always only bet with sums you are comfortable risking, and in many ways that’s why spread betting is a much safer long-term avenue to consider when it comes to day-trading investments.