Is Spread Betting Gambling?

What do raunchy text messages to your Mrs and spread betting have in common?

Pretty much everything. When you send a text telling your Mrs you’ve shipped the kids out to a sleepover and that she should pick any 3 items from the bottom drawer, spread them on the bed and lick a flame to the bondage candles, you’re pretty much hoping it’s going to go down well.

Sometimes, it just doesn’t.

You take the same kind of gamble in financial spread betting. You sort of have a good idea how things are going to play out, but sometimes your timing is off or your Mrs’ BFF from Uni calls in floods of tears just as you’re screwing the top off the cinnamon-scented lube.

Is Spread Betting Gambling?

Yes, spread betting is gambling. There are no two ways about it. By definition, when you place a financial spread bet, you are placing a ‘bet’ on an outcome and hoping for a desired result. It’s not just semantics either.

In the UK, spread betting is considered gambling for tax purposes, despite it not falling under the regulatory oversight of the Gambling Commission.

Is this a bad thing? Of course not. Not if you don’t mind a little bit of a gamble. You just have to be OK with it and accept it for what it is. By doing this, you can get your head in the gambling space and stop telling yourself you know how to play the game.

Believing you know how to play the game or that you’ve cracked the code is a surefire way to find yourself in the pit. That’s the money pit, by the way, not the pit where my forefathers worked. Although, you could argue the two are not so different.

How to Get Your Head In The Gambling Space And Make Money Spread Betting The Financial Markets

Have you ever heard the saying “you become what you think?“

I can categorically say from experience that it is 100% true. There have been at least 3 distinct moments in my life where I ‘became what I thought’. I believe that in order to make money spread betting, you have to know you’re going to make money spread betting.

The only way you can do this is to first accept that spread betting is gambling, no different from playing roulette or blackjack, and then approach the game in the proper way.

1. Accept that the odds are stacked against you and only play with money that you can afford to lose.
2. Apply proper risk management to your bets. For example, if you win 4 bets out of every 10 on average, you’re going to need to make sure that the money you win in your 4 winners is more than the money you lost in your 6 losers and then a little bit more to turn a profit.
   
   Example
   Mathematically speaking, let’s say you have £100. You place ten £10 bets. You lose 6 of them and lose £60. Now you have £40 remaining, tied up in 4 bets.
   
   These bets need to return over £100 to breakeven (or win at least £25 each). To make a profit and be able to call yourself a profitable speculator, you’re going to need to win more than £25 with each of your winning bets.
   
   So, if your winning bets each won £30 (incl. your original stake), you would have a final return of £120 (or £20 profit), even though you lost more than you won.
   
   This would be considered in the trading world a “risk:reward ratio of 1:3.” You risk 1 to try and win 3, which brings me to my final rule for gambling on the financial markets.
   
   
3. When you win, make sure you win big.

Knowing When To Gamble Is The Main Skill In Financial Spread Betting

Once you know that you’re gambling and you need to return at least X to cover Y, then you have the first ingredient for success.

The next thing you need to do is know when a gamble is a good gamble. This is when you’ll probably start to research spread betting systems and technical analysis and trading signals and blah blah.

I can save you a whole lot of time by telling you straight none of it matters. Think about it, does it really matter if the last 15 numbers on the roulette table have all been black? Does it mean the next number has more chance of being red? No. The probability remains the same.

Take my advice and take the shortcut to spread betting profits.

When Is A Gamble A Good Gamble?

The highest probability of winning a bet is when the odds are low. For instance, when the bookmakers believe a certain outcome is more likely than another outcome. Remember, the house always wins, right?

In sports betting, for example, you might say Team A is more likely to beat Team B because Team A is at the top of the table after 30 games and Team B is at the bottom. This would be a good bet. But you probably wouldn’t win much because the odds will be low.

In financial spread betting, we don’t have the luxury of the bookies telling us the most likely outcome, but we do have something better.

We have what is known as “price action”. Price action is the only indicator I follow these days but it wasn’t always like that. When I started trading back in 2011, I spent most of my time learning about technical analysis and how to read fundamentals.

It wasn’t until after I’d lost most of my money over the course of a year and a half that I started to realise that it doesn’t matter how much ‘stuff’ you [think you] know, you could still be wrong. Even the best analysts get it wrong, so how was I, clearly a long way away from being an analyst, ever going to get it right?

This made me take a different approach. I began by asking myself the question “if I am doing all of these things and still losing money, would it really make any difference if I did none of them and traded what I felt?“

This took me down the road of trading what I see and not what I think by following only price action.

Perfecting The Path of Price Action Will Help You Gamble On A Good Bet

Much like low odds at the bookies, price action is a great indication of sentiment. What is price action specifically? Well, here’s a definition from Investopedia.

If markets really are moved by the human emotions of greed and fear, then having a way to measure those emotions and how they apply to a certain stock or asset would seem to be the best indicator you could have to ‘predict’ an outcome – bet, in other words.

If you knew people were fearful of a particular stock, you might say there’s a good chance the price will fall. This will be evidenced by the way the price has moved recently. This is what I mean when I say I follow price action.

The beauty of using only price action to inform your trading decisions is that it takes into account everything that you’re not smart enough to understand or in the loop enough to know. For example, People (analysts, professional traders, machines) much smarter than you and better informed already know everything there is to know about a stock and that is already reflected in the stock price.

When they know something new, it gets reflected in their actions (they buy or sell) and the price moves.

I came to the conclusion after about two years that you can’t outsmart the smartest guy in the room, so just do what he does and benefit.

In practice, that means the good bet is to buy when there’s evidence prices are going up and sell when there’s evidence prices are going down.

Want To See How I Gamble My Way To Tax-Free Profits With Spread Betting?

Now that you know spread betting is nothing more than gambling, perhaps you’d like to see how I use this knowledge to trade the financial markets?

Watch my video below to learn more about the Do Nothing Spread Betting System that I used to earn £25,000 tax free profits in 2018.