Can I make a career of spread betting?

Is financial spread betting accessible to anyone? Can I make a career of spread betting? How long should I expect it to take before I can expect to consistently make money spread betting?

The growing popularity of spread betting and CFD trading has made the stock exchange, currency markets and commodity markets accessible to a wider audience.

The markets are no longer the domain of the professional trader in brokerages and banks who need large volumes of capital to make money of their trades.

Spread betting = flexibility

I always thought that I had a knack for the markets and an understanding of how they work. The question was – how do I make money off this knowledge? Can I make money off the stock exchange without a huge outlay?

I expected that to start trading the markets I would have to put forward close on £5000. And in some case this was a correct assesment. Some brokerages do require heavy lay outs.

Spread betting – an answer

But these large outlays are in fact not essential if you consider spread betting as your entrance into the world of stocks.

The outlay you need is directly linked to the risk of the trade you are about to take and many spread betting providers will allow you to start trading from a small outlay – £50 is all that is needed in some cases.

Spread betting as an income

Those that are able to master the markets are able to make a full and dedicated income off spread betting.

However – and this is a big HOWEVER – getting to this stage will take time.

I have attended many spread betting seminars and spoken to many spread betting professionals – it is generally agreed that most people should accept that it will take a good two years of trials and tribulations before you start making consistent profits.

However – that said – I believe if you can master the disciplines of spread betting you can cut that time significantly.

A career in Spread Betting

If you are intending to make a future out of spread betting then do not take the quick-buck approach. Take the startup business approach.
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I talked to someone, who had recently got in touch with a comments to a story we published – he believes that the time could soon be right for him to make a full time career out of spread betting and quit his job.

What gets you into spread betting? What are your motivations? Do you want the independence? Here is Alex’s* reasoning:

“What drives me is the freedom that spread betting offers – this is something that resonates with all those that are miserable in their jobs, trapped by the fear of passing their life this way. People who look up from their desk and despair, thinking what can we do!”

“Spread betting I believe can offer a way out and give this freedom.”

“It has taken me over a year to get to the position I am at today. I have lost a lot of the money I put in along the way, but every loss is a crucial learning point. You have to take it in.”

Of course I wouldn’t feel comfortable presenting these views without giving the reminder that – even though some people are looking to spread bet as a career – it is not for all. You have to be able to consistently win in spread betting before you can use it as your main income stream.

The risks are large, prohibitively large. With an estimated 20% of people winning in spread betting it goes without saying – it can be dangerous quitting the job when the odds are so heavily stacked against you.

But – if it was easy then everyone would be doing it. If everyone was doing it and winning then there would be no more spread betting houses. People would stop working and we would say good bye to the economy.

I believe that spread betting should be approached like any other form of startup business.

Having worked with a number of entrepreneurs I would suggest a good yard stick for starting a business is about 2 years – by then you will know whether it is feasible, and at that stage you should also be seeing some decent returns. And in those two years one should be prepared to slog it out.

If you are to make a career spread betting then surely it goes without saying you should be prepared to take at least a year, and ideally two years, to learn the ins and outs, develop a trading strategy, and of course learn, learn and learn.

The money you lose should be seen as the investment capital required for any startup business .

Life simply does not work like that.

As Alex says:

“The answer – as is the case with all endeavours is do your homework. Invest the time and invest in knowledge acquisition. There is consensus that you can earn a great living as a day trader – but you need to stick to your strategy. Don’t treat spread betting as a dabble. It isn’t.”

Notes:

* Alex was not willing to reveal his surname

From the Diary of a Newbie Spread Bettor:

The practice account and dreams of 1 hour working days…

Having opened up a spread betting practice account I am, pleasantly, surprised by the amount of money I have already made….

Having opened up a spread betting practice account I am, pleasantly, surprised by the amount of money I have already made….

It is of course play money as this is a spread betting practice account. My spread betting provider has bequeathed me with £50 000 worth of freebie credit; I can’t report as to why this figure was chosen. I can say though that I don’t intend to place such an amount in my first live account.

Perhaps it is a subtle way of communicating to soon to be traders that more is indeed better.

So – I have made two trades – one on Standard Chartered and the other on the FTSE 100.

Standard Chartered is one of the more liquid options out there – just look at the price of one share.

I bought Standard Chartered shares at about 2pm yesterday afternoon and there has only been growth since then. By 36 points to be exact.

Now – this is how spread betting works.

Every unit of currency placed on a bet multiplies by the amount of change in the share price.

I bet £100 on Standard Chartered and my 36 point increase means I have gained £3600. Too put it ever so mildly – not bad for a £100 investment.

When entering the game you can either buy or sell – buy if you think the price is to go up or sell if you think it is to go down.

Luckily I bought – if I hadn’t I would be £3600 down as the same gearing mechanism works in the other direction.

In a rising market this is surely an easy game.

To be honest I have had to pinch myself at how easy the money comes in when spread betting goes right – I know there is a catch somewhere along the line; and I am sure it will make itself known in good time. But for today – roll in dear sterling!

The 1 hour working day lies ahead.