Although investments can yield high rates of returns, investors are often required to put in significant amounts of money to make the investment worthwhile. In addition to involving potentially high levels of risk, investors can be forced to invest the capital for lengthy terms. For mid to long term investments, the investment can be tied up for a number of years with no guarantee of a return. Spread betting is a viable alternative which offers leveraged access to markets. This means traders can obtain a high rate of return on their investment without requiring large deposits or investments.
As well as offering high returns with significant outlay, the trader can determine how long he or she wishes to maintain the investment. For example, a trader may decide to close the bet after minutes, hours or even days. Some traders will ensure the bet is kept open while they are making a profit and close the bet as soon as the market becomes unfavourable. By keeping a close eye on the relevant markets, traders can simply close their bets and limit their risk when they deem it appropriate.
Although many investment opportunities require significant expertise or professional financial advice, the ease of spread betting enables traders to operate without brokers or reliance on large financial institutions which reduces the cost for the trader. The absence of broker’s fees means that the profit generated goes straight to the trader rather than being shared out between various brokers and agents.
However, traders can face losses whilst spread betting so many begin cautiously. Although spreadbetting companies do not limit their services to finance professionals they do stress the importance of learning about the markets prior to betting. In order to assist traders many provide educational tools and methods of measuring market performance as well as access to demo accounts for new investors. For example, investors are encouraged to examine data such as the Moving Averages chart which helps to identify trends and can be useful to determine what to trade and when. Similarly, the Relative Strength Index rates the strength of a trend and provides further information to potential investors. By making use of such data and taking the time to learn the mechanics of spread trading, investors increase their chances of making successful trades and can increase their profits.
The range of markets available to investors means that traders can focus on markets they are familiar with and follow them accordingly. Whilst spread betting companies generally operate in the same manner, each has differing requirements regarding minimum trading amounts and minimum account balances. Companies which offer competition notional trading requirements are often popular with new investors who are looking to begin by placing smaller bets.
The ease of spread betting, particularly when compared to traditional forms of investing, has ensured its popularity with investors. Although spread betting companies are regulated and must operate in accordance with regulations set out by the Financial Services Authorities, the requirement of small minimum deposits and the opportunity to yield significant financial returns ensures that spread betting is one of the most exciting ways to trade the markets.