Risks: Online gambling, CFDs and spread bettings

The earnings through spread betting is similar to gambling, hence, is exempt of taxes. Such trades can be used to offset against long-term low risk investment. To invest, one should put 90 per cent of the total investment into sensible low to medium- risk assets, and if one is interested in different markets, one can allocate 10 per cent into high risk self directing trades. A spread provides difference between buy and sell. Investors can get a spread at $10 and sell at $15, where the spread extends in $5. The change in market rate and the difference provides the stretch. The method offers different ways to invest.

The FCA executive Christopher Woolard said the regulators are preparing to ban CFD crypto currencies i.e. exchange tokens of litecoin and bitcoin etc., sales to retail investors, as these are not supported by banking entities and they do not function as security.   

Online gambling and sports betting are gaining where the UK and Ireland based firm GAN recorded profits in the third quarter of the year through US sports bettings.  Gains increased in the month of September, October and November, in comparison to, last year, where the CEO Dermot Smurfit said this was record performance over the last two quarters.

Risks

Spread betting on alternative investment market is riskiest where customers can bet on large cap, indexes, fx , commodities etc., at a high volatility such as 7.5 per cent where the margins are also higher. One can earn up to 2.5 per cent in intraday and lose the same amount on bad bets.

With short positions, the profits can be limited but the losses can be heavy.

A broker can decide the spread based on the percentage of price and can check the actual trade market for rates.

It is one of the risky leveraged products, which means, if you made a bad bet, can lose completely.

How to prevent risks?

Set up a budget and invest small, where the risks are limited. It will help to learn the methods and identify the mistakes. A new trader should be cautious at the start and start with smaller units.

One should gain knowledge of the risks involved in such trades where there is a good chance of making substantial profits, at the same time, losses, especially, if things do not work as predicted through various calculations.

It is important to maintain flexibility where one should be able to go each time in the same price spread and quickly come out. Each individual trade should be carefully examined and the investor should be able to identify the risk and rewards thoroughly.  

One should be able to sense the bet and try to find where consistent flow of profits can be gained or places where the losses are low.

Use stop loss to prevent loss. It should be used at each individual trade as it helps to control losses and allows coming back in trade during the next session.  

To find out more about spread betting / CFDs, check 99 Alternatives at (http://www.99alternatives.com).