When most people try to get into investing, they only consider a handful of options. Tried and true methods like index funds in IRAs are never a bad idea – in fact they are one of the most reliable ways to build long term security. But what about people who don’t want to invest for the long term. Is there a way to invest that builds security now?
What is Spread Betting?
New investors who spend any amount of time reading internet investment blogs will invariably come across the term “spread betting”. To learn the answer to “what is spread betting?” you’vegot to understand the contemporary internet culture of it as typified by trusted brokers like ETX Capital.
Spread betting is an old investment form, but it has taken on new life in the information age. As long as investment vehicles have been around, investors have wanted to be able to bet on the outcome of specific asset price changes, without actually having to own securities. This allows for returns without an expensive ownership stake. And returns can be as high as the proportion of change in a security’s price. But to really understand this, we’ve got to go into a bit more detail.
When you sign up for your spread betting account, you’ll see a list of hundreds of stocks, indices, Forex currencies, commodities, and more. Your job is to pick one that you know something about and try to predict how its value is going to change in the near future, based on real world information that applies to its evolving market value.
Just guessing isn’t good enough, even if your choice is based on excellent information. You’ll only be able to collect on your correct anticipation by depositing money and starting a contract that expires at a certain time and date of your choosing. It doesn’t matter what the price does in the meantime; all that matters is that when the clock runs out, the price should have risen or fallen according to the change you predicted when you made the contract. If successful, you will get returns based on how far the price changed in your chosen direction. If unsuccessful, you will lose the money you committed at the start of the contract.
Spread Betting and Second Income
Some people who get into spread betting just do it as a hobby. There’s nothing wrong with this, but you’ll have to dig a little deeper if you want to turn spread betting into a legitimate source of income. Fortunately this isn’t as hard as it seems. It just takes research, practice, and patience. Here’s how those factors come into play.
- Research – A good spread bettor gets to know his chosen asset or assets, developing a deep understanding of the many global factors which influence its price fluctuations in the open market. Without good research, you’re just guessing and you won’t be able to win consistently.
- Practice – There are more options and techniques involved in sophisticated spread betting practice than we can describe in a short article like this. It’s important for you to understand these, though, before you try to make a go at earning real money this way. It’s for this reason that quality brokers offer free trial accounts, with which new users can experiment through trial and error without risking actual cash.
- Patience – It takes time to find ideal opportunities. Great spread bettors don’t make new contracts willy nilly; they wait for unique opportunities that all but guarantee their success. It takes practice to recognize what and when those opportunities are.
With practice and learning you should be able to turn spread betting into a real second income. Good luck!