The Biggest Problem With Spread Betting, And How You Can Fix It

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You heard that spread betting was lucrative, so you entered the markets after learning a few basics, thinking it was just a matter of time before you could swim in profits. Well, the trend went against you and you lost a big chunk of your account balance.

Well, that same scenario is typical of traders who lose money most of the time. To be realistic, there is actually 5% of traders who are making it spread betting for a living. The rest either have a bad trading plan, or are treating it as fan and not business.

If you want to know the biggest problem with spread betting and how to fix it, this article will give you a clue on how to go about it.

The biggest problem with spread betting and how you can fix it

Let’s say you signed up with the CMC Markets and funded your trading account with $250. Would you be able to triple that capital in the long run? Of course yes. But how are you planning to realize this success?

You will probably answer this question by saying that you will use the right trading instruments like the MACD, RSI, and moving averages to gauge market sentiments. But in as much as this answer is correct, these things only play a small part in your entire performance. The real impediments that make people fail in spread betting are listed below:

All strategies are correct

Traders tend to think that losing their entire trading capital is an indication that their strategy isn’t working.

If you lose the entire $250, or lose multiple times of that amount, it doesn’t really mean that your system is ineffective. Most newcomers don’t understand that success in spread betting or Forex is not pegged on the win/loss ratio, but is rather dependent on how much they stand to lose when they are wrong and how much they stand to win when they are right. As a matter of fact, losing 5X$250 and making 1X$5000 would still place your account in good standing regardless of the strategy you used. So please understand that it’s never about the win/loss ratio.

Many traders are too impatient to make good profits

We have agreed that the only acceptable way to lose is to get knocked out of the game. If you’re able to preserve your capital no matter which trading strategy you use, then there’s always an opportunity to profit.

The problem, however, is that most traders are impatient when they think of the potential profits they are likely to make.

And the only solution to fixing this is to develop a plan, back-test it, modify and back-test again before trading it either to success or destruction. If this plan happens to be profitable, you should consider trading it with small stakes (remember greed is one reason why traders lose money). The game also changes when you switch from demo to a real account, so only ramp up your stakes when you have built a decent income.

Most traders ignore the fundamentals of successful trading

Most traders don’t make it because they have a gambling mentality towards spread betting. Consequently, they end up gearing up to ridiculous levels, thinking the market would favor them by chance.

Others have a very short term view of the market. They don’t truly listen to where the market is going.

When it comes to observing the sins of trading, they don’t take them seriously yet these things determine whether or not one will be successful in their trading.

Newbies trade against the trend when a weak signal emerges suggesting the trend will turn. That’s an impatient way of trading, and it often leads to more losses than profits.

Other traders ignore stop losses, or at best, they keep extending their stop losses in the hope that the market will eventually turn in their favor. This is the quickest way to blow an account.

Finally, the same traders ignore the 2% money management rule. They risk over and above 2% of their account balance. To add salt to the wound, they open multiple trades hopping to make substantial profits from the running trades. Again, this is one of the surest ways to lose money spread betting, why, because each trade carries a risk with it. If you place 5 trades at the same time, you are essentially multiplying your risks.

Conclusion

The only way to keep the markets from swallowing your capital is to correct those mistakes and be patient. There is no magic bullet for those who are looking for working strategies to benefit from spread trading. Also, remember not to bet for the sake of doing so. Treat it as you would with a serious business.

Saving and Side Hustles! Using Forex Trading Wisely

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Although there is somewhat of a short-term nature regarding the Forex markets, we should always keep in mind that such a side hustle can quickly evolve into a lucrative financial strategy for years into the future. Due to recent market instability, a growing number of traders are wisely considering the ways in which they can turn their side hustle into a genuine savings plan. To clarify things a bit, let us take a look at some powerful methods to keep in mind. Preparation is the key to success with any investment.

The Rule of 30 Per Cent

Many traders who are new to the currency exchange sector could be unsure how much money they should put away after a successful trade. This can be especially confusing when the lure of short-term profits interferes with long-term goals. Naturally, every individual will gravitate towards his or her own preferences. Novices should embrace the rule of 30 per cent. To look at this concept from another angle, 30 per cent of all savings will be allotted into a dedicated account. These are not to be used for any future trades. This can help to add momentum to any side hustle.

Margins: To Be or Not to Be?

Some view margin trading as a decidedly risky venture. To be sure, losses can far eclipse the initial amount that was invested towards a specific position. The exact opposite is also very true. The benefit of any margin trade is that although the investor will only put down a fraction of the total value of an asset, the full profit can be realised if its momentum is predicted correctly. This can be a wonderful opportunity for those who may not have a great deal of spare capital. However, it is IMPERATIVE that margins be correctly understood before any such position is chosen.

Tight Spreads

The term “spread” is frequently used in conjunction with the Forex markets. A spread is the difference between the buy and the sell price. Different online brokers will naturally provide different spreads. Tight spreads below a single pip are associated with lower transaction costs per trade. This will benefit those who are executing multiple positions during a given time period. Also, low spreads such as those which are associated with CMC Markets are great ways to experiment with different trading styles. Finally, favourable spreads (such as 0.7 pips) can help to maximise the rewards offered by automated trading systems.

A side hustle does not necessarily have to be associated with an excessive level of risk. Understanding the importance of the concepts mentioned above is a prudent way to enter into the exciting world of currency trading. Still, losses within this industry are a fact and not every trade proves to be profitable. Using the services only found through CMC Markets is a powerful way to enjoy a profitable long-term stance. Smart trading requires patience, knowledge and experience. The architecture utilised by CMC Markets will help to provide such a financially bright future.

Five Ways You are Secretly Overspending

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Many look at their bank statements and wonder what happened to all of their money. Financial advisors understand very clearly that the biggest problem a client faces is their own bad habits. Though most people mean well with their finances, overspending can be a difficult habit to kick. The most important step in learning how to stop overspending is to become conscious of the ways you continue to spend without thinking. Below are five things that may be costing you big money over time:

Credit Cards:

Credit cards are designed to make people feel as though they have more spending power than they actually do. This mind-frame alone makes having a credit card a big danger for those trying to spend less. The simple act of swiping a card is easier on a guilty conscience than counting a stack of cash. After getting rid of your credit card, you may find that the act of using an ATM to withdraw physical cash is enough to lower your spending substantially.

Peer Pressure:

Buying a new pair of shoes or even a car because a friend has is something not many are willing to admit; however, there is little doubt that most have experienced this to some degree. If your friends always want to eat at high-end restaurants or shop at expensive stores, you may want to reconsider who you spend time with. More importantly, ask yourself whether a true friend should make you feel compelled to spend money more money than you should. Even friends with the best intentions can negatively influence you financially. Awareness of a friend’s power is the best weapon you can have.

Unhappiness:

Studies show that the more anxious or stressed you become, the more likely you are to overspend. While shopping has been shown to temporarily make us happier, in the long-term it tends to trap people in a cycle of financial self-destruction. Awareness of yourself and why you are truly spending is the best weapon anyone can have in combating this issue. Develop cost-free ways of feeling more fulfilled so that you can begin to only spend on necessities.

Gifts:

Scientists who study what makes us happy have learned that buying things for other people does make us feel better about ourselves. However, when it comes to finances, there is a big difference between supporting a child’s education or buying a modest birthday gift, and over-indulging. Whether it is a spouse we want to romance or a child begging for a new toy, saying no to ourselves and others can be difficult. Try taking the time to establish financial priorities with your spouse and children in a way that creates a healthy and sustainable dialogue.

Subscriptions:

Many falsely see the monthly phone and cable bills as necessities that must be purchased. However, these expenses have only recently become the norm. Ask yourself how often you truly make a phone call, could you simply use Wi-Fi to send texts? Perhaps cancelling your cable subscription in favor of reading more books could be the best way to save money this year.