Big wins and big losses in spread betting

To those who are researching their market and preparing to start spread betting, or to those who perhaps are just starting to read about this extraordinary way to make money, it should quickly become apparent that this is a way to make some big money – but also a way to make some big losses if you are not careful, just like any other market.

For example, in 2008 Mike Ashley the Newcastle United FC owner reportedly lost somewhere between the value of £130m and £300m on a speculative spread bet on the HBOS share price.

However, according to spread trading firms, large punters such as Mike Ashley are actually quite rare – reputedly making up fewer than 1 percent of the spread betting market – and known in the industry as ‘whales’.

To help you avoid losing more than you can afford, a stop loss is what you need. The stop loss is an order to the spread betting firm when you place the spread bet to say that if the market moves in the direction you did not want it to, then they should stop the position at a particular point so you will be able to afford the loss.

A wise spread betting professional uses the stop loss to protect himself.