Is spread betting a mug’s game?

As we have mentioned before, when you begin to research this world of spread betting you are bound to come across people who will tell you that spread betting is a mug’s game, but is it?

It is surprising how people’s enthusiasm for spread betting varies so widely and is generally at one end of the scale or the other; it is either a mug’s game or fantastic.  

Spread betting is one of the very few ways in which you can make money from a falling market and nowadays is seen as not only mass market but an alternative investment form that many professional investors see as a crucial part of their trading arsenal.

Day trading is something a little bit different. When you open a trade, as it is called when you place a spread bet, you set a time for this to be open and those who are trading over the course of just one day can find that just one or two points make the difference between a profit and a loss.

Most professional spread betters, and let’s face it, they’re the ones making the money and the ones we aspire to be like, will place a position over a longer period of time.

There are probably two main reasons why people give spread betting or spread trading a bad reputation; firstly, because they jumped in feet first without finding out enough about their market to knowledgably place a trade or secondly because they allowed themselves to become exposed to too much risk. You need to know what you are doing and use stop losses to limit your exposure to loss and if you can do these two things, then spread betting is tax efficient and can be an excellent investment.