Spread Betting Vs Conventional Share Trading

Today, financial investors and traders are equally interested in Spread Betting and Share Trading. Both of them are popular as both of them provide good leverage and gearing to the individuals involved in such markets. Both of them carry risk in order to earn profits and in both the cases individuals can manage risk with proper knowledge, planning and strategies. Obviously, risk has to be there as there is profit. Everything which gives you profit involves risk. This is one of the simplest rules of any business. So, for sure, in case you are planning to venture out in these markets, be prepared to face risks else this is not the place for you.

If someone asks a trader to choose between CFD and Share Trading then how is that supposed to be done? On what factors can one make a choice? Well, these questions seem easy but then they are not easy to be answered. There few differences between the two of them and by understanding these differences, one can make a decision as to what needs to be chosen as per individual needs and requirements.

Spread betting is any of various type of wagering on the outcome of an event, where the pay-off is based on the accuracy of the wager, rather than a simple “win or lose” outcome, such as fixed-odds (or money-line) betting or pari-mutuel betting. A spread is a range of outcomes, and the bet is whether the outcome will be above or below the spread. Spread betting has been a major growth market in recent years, with the number of gamblers heading towards one million. Spread betting carries a high level of risk, with potential losses or gains far in excess of the original money wagered.

Trading shares is similar to trading antiques. Your aim is to “buy low” and “sell high”. Some trading strategies – momentum strategies – have refined this concept to “buy high” and “sell even higher”. Many beginners think they can trade shares on the basis of gut feel. Every day their money arrives in the markets and is welcomed greedily by experienced traders whose sole objective is to make that money their own. Gut-feel traders don’t last long in the markets. They usually suffer major losses and stop trading, having fattened the wallets of experienced traders. If you want to trade successfully, you need a strategy that gives you clear buy and sell signals. You need to trust your strategy sufficiently to act on its signals without hesitation. The way to build trust in your trading strategy is to test it on paper before committing any real money.

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