The retail traders like to think if they had stock market experience before investing in this market, they can make a lot of money. It is nothing but a wrong idea that most of the people in this market have got. If you think you can use your stock market knowledge in spread betting, you can make the profit but it would not help you very much in your career. Most of the time you will find that if there is nothing similar with stock market trading, there are more things which are different in stock markets trading. You cannot use the stock market knowledge full in spread betting but you can use part of its knowledge. Many traders think how to improvise their knowledge of the stock market in spread trading. It is not possible but you can use your knowledge of currency trading to get an edge over the market. This article will tell you why you need to use your knowledge of stock market not usable in spread trading. You can use it small but not as much as you would expect.
Spread betting is very much similar to Forex trading only with one exception. In Forex trading, you have to buy or sell the underlying asset to make a profit. But in spread betting, you just have to predict the future price movement of the financial instrument to make money. Other than this every other single trading parameters are exactly the same. For instance, you have to do all the technical analysis to make a profit in spread betting. Without having the proper knowledge about technical and fundamental analysis you won’t be able to find the sweet trading spot. It’s true that even after doing all the necessary calculations you will often have to face losing trades. But losing is nothing but a part of your trading career.
Most retail traders are using high leverage in spread trading. Leverage is just like double edge sword. If you can manage it efficiently then you can see exponential growth in your trading capital. On the contrary it can be very devastating in the hands of novice traders.
The trading basics is same
It is good news for you that the trading basic of Forex, spread betting and stock market are the same. When people are trading in Forex and stock market, they are trading with the currency pairs. They are buying and selling bonds, shares and many things. When trading in Forex is global, the stock market trading is local and you will care about what is happening in your country. Many people have a very good history of stock market trading but when they begin trading in Forex, they begin to lose their money. Some similarities do not say you are going to make a fortune in spread betting. To be precise spread betting and forex trading is almost identical.
The market is volatile and many factors influence the market
This Forex market is very volatile. You will have heard one thing very common among the traders of Forex. You will see that when most of the people are losing their money, they have said that they placed the trade in the market when it was a perfect trend and the trend was going in their favor. They placed the trades and the trend changed. They begin to lose their money and they have to close their trades to save their account. This is what Forex volatility can do to your account. You will not get this volatile experience on the stock market. The market is also influenced by many factors around the world. This is a global market and if the currency price of one country changes, you will also see the influence of the other currency pairs. The risks and the profits are many times more in Forex. You cannot do much with your stock market trading if you do not learn how to trade in Forex.