When to avoid spread betting

Spread betting is, in the right hands, a great thing. With a little knowledge you can make a lot of money but you have to know what you are doing and it takes time to research your market and possibly find the right sign to open a trade.

There are also scenarios in which you should avoid spread betting because although there are plenty of big wins to be had out there, you don’t want to lose all your capital at once.

• When you know nothing about the market: if you don’t know about the company or the market that you are thinking of spread trading on then steer clear and wait till you do. Most professional spread traders who make their living by spread betting specialise in something, whether it’s commodities, gold, foreign exchange trading or the FTSE, so if you want to earn good money do the same

• If you are new to spread betting then you might want to stay away from the indices market for a while.  It can be difficult to get to know one or two companies well enough to predict how their share price will move so predicting the combined movement of a hundred or so companies is best left to the experienced spread traders

• Day trading is another area best left to those experienced in spread trading. Your window is only a mere eight hours or so and usually results in the beginner staring at a screen scared stiff for the whole day, so try longer trades from a few days to a month where there is more time for the market to move your way