Spread betting!

inversions wrote: »

I will, if I decide to do it, risk only a couple of hundred at a time. Assuming this is possible. If it isn't possible or if risking only such a small amount is impractical then I will probably not do it at all.

Yes that is perfectly possible on a couple of hundred at a time. You could play indexes, exchange rates options and currencies etc.

On some of the markets with larger minimums, you would find that £200 is perhaps not enough because if you want to do it low risk, rather than on a lot of borrowed money, your £200 does not buy you enough of a stake. For example I could bet on the GBP/USD exchange rate market which is currently $1.7150 to the pound, or 17150 points. I could bet £0.5 a point. If the market goes down 400 points to 16750 (about 2.5%), I've lost my £200. If it went up to 17550 I have doubled my money. That's quite a big bet. Obviously if your starting pot of cash was £10,000 of play money, you don't have much / any risk of going bust because the exchange rate is not going to go to zero dollars to the pound. So the less risk you want to take, the more starting money you need to have.

Similarly you could bet £1 per penny of Marks and Spencer share price and if it dropped by nearly half (from 429p to 229p) you would have used up your £200. It is not going to drop by nearly half any time soon, in my humble opinion. So then maybe you could risk £5 per point. But then you can only afford for it to go down 10% or so (40 points) before you've lost all your money. So as you can see, depending on the markets and the minimum spread at your particular provider, it is perfectly possible to bet £200 without a high risk of losing it all. Alternatively you can bet with a higher risk of losing it all, if you want. Or spread yourself over more companies and more bets and you win some and lose some (hopefully don't lose all).

There are other routes to take positions on markets though, so you could buy out-of-the-money options and other things to get you chances of making reasonable wins if the markets moved by the right amount. And you can set stop-losses (or more expensive 'guaranteed' stop losses) to ensure you are unlikely to be on the hook for more than the £200. Unless you actually do want to be and are happy to keep paying margin calls every time they tell you your deposit is no longer covered by your cash in the account.

As a side note, if you have trained with a 'virtual' bigger budget for a week or few, you may have conditioned yourself to make larger bets which can be dangerous. But you said you don't want to be talked out of it, so go ahead and enjoy in moderation.

Of the above providers I now only use IG but if you find ones with demo accounts it does not hurt to demo several. And if you're just looking for a play with spreadbetting and not necessarily on financial instruments / investments, there are groups like Sporting Index which will let you place bets on football or cricket or golf or elections or whatever in a spreadbet style, which can be interesting.

inversions wrote: »

I was advised that some regulars on here spread bet. I know this is a mugs game. I've read that only between 10 and 20% of accounts make money and that addiction problems are higher with spread betting than with other forms of gambling.

It's not really a "mug's game", it just needs some thought, and understanding of the risks.

I used to use it for my stock trading (as it's capital gains tax free), but regulations stop me doing that now.