Confessions of a Virgin Spread Bettor

Jon ‘Hawkeye’ ‘hawkeYe’ Hawkins is no ordinary spread bettor, no siree. He is a supremely bad one.

“You used to work in the City.  You’ll find spread betting a doddle.”  True, once upon a time I did some time in the banking industry, but it’s fair to say that none of it could have helped save me from inevitable and ignominious failure at the hands of a financial spread betting account.

In principle, though, it’s true: spread betting is essentially very easy. If you can read, count and use the internet (and you’re over 18) then you’ll be perfectly capable of operating a spread betting account. The problem is, you might not be very good at it, in which case you’ll find it very easy to lose money without having to try very hard, which is exactly what I did when given my own spread betting account to trial.

Despite this, financial spread betting is hugely popular, which suggests not only that it’s addictive (which it certainly is), but that some people are able to make money out of it (which I’m certainly not). Online trading platforms are registering record numbers in new account registrations and trading activity.

My performance was less than spectacular, however; in just two weeks’ trading I managed to scrub £2,000 off a £50,000 account through a combination of stupidity, negligence and sheer recklessness. Had my account been an animal, the RSPCA would have been well within their rights to have had me hung drawn and quartered or burned at the stake or whatever punishment it is they dish up these days for cruelty, neglect and gross incompetence.

So while I’m in no position to offer anyone advice on how to spread bet (you’ll find plenty of it online or, better still, elsewhere in these pages), I can at least reveal my path to destruction so that others might avoid a similar fate.

Here, then, is a comprehensive guide to what not to do if you intend to make a profit from financial spread betting – avoid these pitfalls and you’ve really no excuse other than being generally useless. That’s what I’m claiming, but then I’m a words guy now; you lot should almost certainly know better.

Starting out with the most volatile trade you can find will not accelerate your learning

Knowing where to begin with your brand spanking new spread betting account is far from easy, but I can assure

you that you won’t make life easier for yourself by seeking out the most volatile currency pairs and attempting to train yourself through adversity. I chose my trades unwisely, laughed in the face of stops and limits, and leveraged my positions completely inappropriately.

As introductions go, it was like learning to drive in a TVR on sheet ice, and not a great deal less expensive. On day one I was a hero – miles into the black and an instant master of my new art. On day two I lost everything I’d gained and more, which, as it turned out, was about as good as things got throughout the remainder of my extraordinarily (and mercifully) brief spread-betting career.

Don’t follow your instincts if your instincts are universally unreliable

“Do not follow the crowd. Ignore the market, the crowd, and its fashions,” said that wise old bird Warren Buffet – and let’s face it, he should know. Which is all very well providing you’ve got finely tuned instincts and decades of experience – neither of which I could call on to assist me.

And yet, on the basis that trading on news stories would give me no discernible edge over the next bettor, I chose to trust my instincts. I shouldn’t have bothered, as a lifetime’s worth of useless hunches and misguided intuition should have taught me. I had a ‘feeling’ BP was undervalued in the short-term. I, as it inevitably turned out, was wrong.

Never assume that brilliant things will happen for you if you adopt a nonchalant hands-off approach

In the early, heady, still optimistic days of my spread-betting experiment, I checked my positions incessantly, lavishing them with almost maternal care. I was Sven, not Fabio – patiently coaxing the best out of my trades rather than playing the distant, analytical disciplinarian.

And then, as my P&L started out on its inexorable journey into the negative, I began to look away. The iPhone on which I had restlessly followed my progress was shoved into a drawer and my laptop remained firmly shut. Perhaps, I reasoned, a day or two at arm’s length would allow my positions to do their own thing, untroubled by my constant fettling. And in a sense I was right – they certainly did their own thing, it just wasn’t the particular ‘thing’ I’d have chosen myself. Still, at least I didn’t have to watch it happen.

Don’t trade and work at the same time

Multitasking not being one of my fortes (‘what is?” I hear you ask), I should have known better than to juggle running my spread-betting portfolio with my ‘proper’ work (yes, I’m talking about this). Given that my brain, like that of Tyrannosaurus rex before me, is barely big enough to enable me to feed myself and move my own limbs, tasking it with writing and making trading decisions simultaneously was always going to be a bridge too far for my grey matter.

As, apparently, was financial spread betting full-stop, which can now be filed alongside skateboarding and finishing Lord of the Rings on the list of things I probably have to accept are beyond my capabilities. If it’s beyond yours too, you should probably consider becoming a writer. Any old muppet can do it – just look at me.