Spread betting is an easy means to benefit from the foreign exchange (forex) market. The forex market is highly liquid (turnover has skyrocketed from approximately 5 billion USD in 1977 to a staggering 1.5 trillion US dollars today).
Its price drives are not dependent to bull and bear markets. From what I can tell after reading up over the Forex a few months ago, this stuff can become quite confusing if you have never done it before.
In this case, I would suggest hiring on a broker of some sort of a consultant that can help guide you through the way. One thing you are going to want to be knowledgeable about it the “hidden charge” that a lot of brokers don’t tell you about which is called - the interest rate. When your positions roll over it is done automatically so that’s nice but you really need to watch out for the interest rate because its fluctuation can be incredibly high.
Maybe it’s best to straight up ask the broker what he or she charges for the interest rate, this could probably end up helping you make a better decision as to who to go with. On most of the websites you can check out today you will find rates so that you can compare spreads but it’s also important to check if the spread is variable or fixed.
A fixed spread means precisely that - it will always be the identical no matter what time of day or night it is. Some brokers use a variable spread, which may seem to be nice and small when the market is quiet, but when things get busy they can broaden the spread which means the market must move more in your favor before you start to make a profit.
Fixed spreads are generally slightly wider than the variable spreads are when at their narrowest, but over the long-term fixed can be safer. In the case of spread betting, you really can’t have the best of both worlds. All you can do is study up and try to find out everything you possibly can about fixed, variables, forex, spread betting, positioning, etc.
Personally, it wouldn’t matter if I was betting $10 or $10,000,000 I would want to find out everything I could beforehand because, no one likes losing money! In the end, it seems that both spread betting and Forex both have their benefits and disadvantages. But I think the choice really depends on the person spending the money - you. Both of these options are medium to high risk, but if you do it correctly you could have a large return on investment.
One thing is for sure, neither of these options is for the faint of heart. The “numbers” seem to always be fluctuating. Just remember, in the end, it’s important that you don’t bite off more than you can chew. In other words, - if you can’t risk it, don’t!
This Author is a huge fan of Spread Betting
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