If you’re interested in the idea of Forex spread betting but don’t quite understand it then you’ve come to the right place. The first thing to say is that if you want to get rich quick and start driving a supercar whilst wearing designer Italian suites then, no, Forex spread betting isn’t right for you. It can be used to make money, yes, but the profits made are generally incremental and build slowly, particularly if you’re new to the discipline and learning how the markets work. In time, if you study carefully, take the right approach and learn from your mistakes then, yes, you will be able to make money from forex spread betting, but reaching that position requires acting, in the first place at least, as if you’re in no hurry to get there.
What is Forex Spread betting?
Spread betting per se consists of a financial transaction in which goods and assets don’t have to be traded as speculations are made on various markets, in this case the foreign exchange markets. It isn’t necessary to buy and sell any actual items when spread betting, merely to make a prediction on how much a number is going to shift up or down or, in the case of Forex spread betting, how much two currencies are going to shift in relation to each other. The appeal of spread betting is fairly obvious. You can start small with very little initial capital, or even learn the trade by utilising the various simulators that are available. The nature of the foreign exchange markets means that you can either trade or check the prices 24 hours a day and any profit you do manage to make won’t be subject to capital gains tax. The intricacies of Forex spread betting have been explained elsewhere, but a simple explanation is that it involves using your reading of the markets (as well as wider political and economic events) to predict how currencies such as the dollar and the euro are going to move against each other.
Is it right for me?
Are you in a hurry? If yes, then Forex spread betting isn’t right for you. It’s a form of speculation which has to be learned slowly and with a degree of caution. At some point you’re going to be risking your own real money in the real world, and you want to be fully prepared for this, which means practicing on simulators and taking the time to read up on the seemingly dry details of how various currencies are faring.
Are you emotional? We all are, to some degree or another, but are you the kind of person who makes decisions based on gut feeling, hunches, anger, pride or instinct? If so, the door is over there. Successful Forex trading relies on research and understanding, not that feeling you’ve got in your water (that’s probably a kidney stone).
Can you be careful? Will you be able to ring fence a certain amount of money for forex trading and not go beyond it, even if you’re certain you’re chasing a winning position. If you’re the kind of person who would keep being tempted to have ‘just one last go’ on a roulette wheel until it dawns on you that you’ve just gambled away your spouse’s car, then forex trading may be too much of a temptation. If you know you could access more money than you need the iron willpower to realise that you won’t.
Do you want lots of fun? Well…….Forex trading can be fun, especially when you get it right, but getting it right generally requires doing lots of stuff that won’t be much fun, like reading through currency pairs charts. If you want the kind of fun that comes with the satisfaction of having earned it, then forex spread betting may well be right for you.