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Education: Do You Think Spread Betters Need It?

A lot of people found out about CFD and spread betting shops from their buddy on the trading desk

. The media coverage over the past years led by the Financial Times, and some of the other periodicals, have done a good job of covering derivatives broadly. What I've seen occur as a result of that is a higher awareness and a higher interest level from people that previously may not have had the requisite levels of competency when it comes to risk management techniques.

I definitely think spread betters or stock markets investors need education. I think there is this perception among traders and investors that it's actually very easy to make money out of the market and although it may be easier down the line, I think a lot of novices are perhaps a little bit taken aback at how difficult it is to actually make sustainable income, making your portfolio or your equity curve grow step by step. I think a lot of people are misjudging the volatility in the markets, and they are misjudging the effort they have to put in and the effort that professionals put in order to be profitable in the market.

I also believe private investors should be aware that there is a leverage question so that when they do enter into a CFD or a spreadbet, they need to be 100% aware of what they're doing and unfortunately, from experience, I can say that not everyone does in fact know what they're doing. It's a question of education, of going out there and telling them what's going on in the market and how it works.

Most spread betting providers offer free trading seminars and webinars and most will cover the most basic technical analysis, chart patterns, what to look out for, what does it mean when the Dow does this, how does it affect the Footsie, what do you need to do to derive buy and sell signals in the market..etc Most providers will also have in-house seminars and introduce the product along with the trading software.

I always say 'Don't worry about the profits, learn to minimise your losses. Learn about cash management, learn to make leverage work in your favour and not as your enemy.' Clients should be able to trace back to the market to compare pricing and they need to grasp how to use stops and limits in their favour.

I hope people out of this with a more informed approach as opposed to just being let loose on something that is inherently, not dangerous but risky. The most important point for an investor, any sort of investor, is can they afford not to look at spread betting? Sure, this might not be for you, but you can't just decide it's not for you without at least looking at spread betting and understanding the mechanics.

by: luckystrike
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Education: Do You Think Spread Betters Need It?