When it comes to secondary income and side hustles, spread betting usually isn’t part of the conversation. Most people haven’t even heard of spread betting, many of those who have don’t know what it is, and people who have an idea may be skeptical about it. Only experienced spread bettors know what this investment form really is, and how to create a real second income from the earnings thereof.
Before we get into the specifics, let’s first remind ourselves “What is spread betting?” Spread betting is what happens when you make a financial commitment on the basis of a value prediction that will end at a specific future time.
A user might look through the long list of securities, markets, and currencies on a broker like ETX Capital, then select one they know a great deal about. The user makes a prediction that one week from today (or another time, user’s choice), the price of this security will have risen. If at the end of that time, the price has indeed risen, the user gets returns, based on how much money was at risk and how much the price actually rose. If the price goes the other way, the user loses the deposit.
Spread Betting is a Real Investment
A common criticism of spread betting is that “it’s not a real investment – it’s speculation”. While this might be true for a user who has know knowledge or experience about this investment form, it’s certainly not true for experienced spread bettors.
As with any practice where money is at risk, success will come to those who are most prepared. Whether we’re talking about starting a small business or becoming a professional poker player, the successful person tries to learn as much as possible, to remove as much guesswork from the risk as possible.
In the case of the professional poker player, they learn all of the statistics and odds that go along with every possible card and hand combination possible. When they make bets, they know exactly how likely they are to win the hand. When non-professionals play, there is much more guesswork, “rolling the dice” if you will. But for professionals, poker is not gambling. It’s something else.
The same is true of stock market investors. If you were to randomly pick a handful of stocks to buy, or pick one just because you’ve heard “it’s a good company”, you would probably fail, but those who understand value investment and do their due diligence will succeed in the short and long term. For these people, taking part in the stock market is not a speculation.
The same is true with spread betting. For those who become educated about the price behaviors (and their causes) of one or more financial entities, will become very likely to make accurate predictions about their future value.
How to Turn Spread Betting Into a Second Income
The best way to succeed at spread betting is to 1) open a free trial account with a broker that will let you make bets without the risk of losing money, 2) find financial entities that you know something about or are very interested in, 3) learn about the real world value fluctuations of these entities and why they happen, 4) make educated guesses about how these values will change in the future based on what you’ve learned.
Once you are able to make knowledgeable predictions about future values, you will start to do very well at spread betting, just as the investor does well when they learn about the underlying value of a company. For these people, spread betting is an investment, and with time, a reliable second income source.