Investments are always good! The reason that I am stating this is that I believe a smart investor will either end up with good returns or if not will then learn a hard lesson and not repeat that mistake. Nevertheless, it is important that we put our investment capital in safe and profitable areas. One such opportunity that is extremely profitable is spread betting. This is one such financial instrument that has claimed to have reaped ten times fold profits for its investors.

Money making is now not only for the financial big shots and seasoned professionals, but also for people like you and me! If you are wondering if it is a safe mode to invest we are going to provide you in this article with some fundamental tips that will help you make sure that you are on the winning end.

Spread betting works on a simple enough logic. Suppose you believe that the price if gold is going to fall this week, you can sell the index at today’s price which is higher. However if you instead believe it is to rise, you can buy the index at today’s price which is lower. If the market price of gold has moved as you had predicted, you will receive the amount which you had bet multiplied by the number of points in difference to today’s price. The downside is that you stand a chance to lose a pretty big sum of money as well if the proper risk management techniques have not been implemented.

Once you get into it, make sure that you calculate all your advances. A wrong move can be disastrous especially when you have high stakes. To be safe, you have a couple of options. The first and the most used one these days are the guaranteed stops. Some institutions such as the IG Index provide you with a limit to the maximum you will lose in case of a price speculation gone wrong. However, this facility comes at a price; you will have to pay the institution a small amount according to the amount that you bet. The small premium will seem negligible once you fully access the dangers of unstopped betting.

Hedging is another option which you can use. Using this, you hedge a speculation portfolio using a spread bet, meaning you use one to offset another. You can contact your broker to get a better idea about these two techniques.

Financial spread betting is very lucrative however does indeed have its share of risks. One can have high profitable returns, however, can have equally as much if not more financial loss. It is for this reason that you need to make sure that you analyze the implications before venturing into it.