Reasons Why People Lose Money In Spread Betting

Michael Fasogbon

Updated: 17 November 2023

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The forex market is one of the best platforms for investors to accumulate their wealth.

However, spread betting is another exciting and innovative way to earn in forex as well as other financial markets.

Interestingly, the performance of the market doesn’t affect spread betting; hence, there’s an opportunity always for some profits.

Surprisingly, several folks have lost money using this strategy, but the truth is, spread betting is neither extra-risky nor difficult.

So, why do people lose money in spread betting?

Basically, it all comes down to people failing to consider significant and fundamental facts.

To ensure that you don’t find yourself on the losing end in spread betting, here are some of the things you should avoid.

The Choice of Your Trading Platform

Perhaps, a trading platform should be one of the most important things to consider. It’s on the platform that all the activity takes place.

Various brokers offer different platforms that can work against your needs.

A good platform should have a perfect interface, be user-friendly, and, most importantly, be accessible to establish a comfort level of understanding the market.

Most folks fail to choose the best platform and find things difficult and end up losing money.

Not Managing Money

Most people lose money before even starting. The broker you choose to begin with can determine how long you stay in the game. Each broker offers various minimum bet sizes, and to minimize the risks as a beginner; it’s advisable to bet minimum amounts.

It’s a simple fact that most people fail to understand and prefer big bets as well as substantial initial deposits.

Therefore, when the bets backfire, they lose all the money. You don’t have to risk more than 2% of the equity on each trade; that way, and you’ll have enough to see you survive several losing trades.

Lack of Knowledge and Understanding

The only problem with spread betting, like the forex market, is the inability to predict the outcome.

Therefore, most folks take it as another form of gambling, which is a huge mistake.

Lack of learning and understanding the basics has led to several people losing money.

Most newbies jump into the market without any preparation and find themselves on the losing end of spread betting.

It’s essential to learn how to read the company’s balance sheets and how to interpret the basic forex charts.

Always have some relevant background of basic concepts before attempting trades or bets in any market.

Not Using Stop-Loss Orders

Most people don’t enter a stop once they get a fill. Besides, entering a stop is never enough. One must know where to place a stop-loss. What can help in such a case is having a well-written trading plan to help with decisions.

It helps to specify the amount to be risked for every trade, and then help in placing a stop accordingly.

Failure to understand the potential of stop-loss or not to obey it once it’s placed has cost a lot of people in spread betting.

Going for Several Markets

Another common mistake that bettors make is going for several markets. Brokers provide an array of markets that bettors give a try.

However, one thing they fail to understand is that these markets behave differently, and one win in a certain market will not apply in another.

Therefore, you should master a few markets and perfect them by practicing hard and strengthening analytical skills for those markets.

Start with Enough Money

Starting with a significant amount is good, but it’s never a guarantee that you’ll be successful. Most folks have started big but ended up losing.

The reason being, they never had a trading plan, and they lacked discipline.

However, starting with enough money while you keep other factors such as betting small and sticking to a trading plan will keep you on for long as you continue gathering experience. At the end of the day, you’ll start gaining.

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Nevertheless, spread betting once done in the right way can be profitable. It only requires one to use the stop-losses, specializes in some markets, pick the right platform, and at least have some basic understanding of the market.

Reasons Why People Lose Money In Spread Betting

Michael Fasogbon

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