September 27, 2011
The Pros And Cons Of Using Betting Firms To Trade Forex
There are many ways to trade forex these days. For example you can use a traditional forex broker or you can use a spread betting company. However we are now seeing a lot of bookmakers getting in on the act as well, and you can now bet on the currency markets with a number of different bookies online.
There are two main advantages. First of all any profits that you make are generally free of tax. This is certainly the case in the UK at least, although this is obviously not the case in many countries.
Secondly they offer a wide range of intraday markets, and are therefore ideal for short term traders. For instance a lot of bookmakers offer 2 minute, 5 minute, 1 hour and daily markets, and you can bet on the price being above or below a certain level or within certain price ranges at the end of each period.
Unfortunately there are a few drawbacks as well. The first drawback is that they are not really suited to big-hitters because they often impose a maximum stake per bet. This could be as low as £100 or £200, for example, so they are more suited to those traders who are just starting out.
Another drawback is the main issue that I personally have with these bookmakers, and that's the age old issue of what happens if you are a skilled trader and start winning lots of money off them on a regular basis.
Whilst they will do everything they can to attract new customers, they do not want winning customers. You will find this out for yourself if you start making decent profits. After a while they will eventually reduce the maximum bet size to stop you winning too much money, or they will simply ban you altogether, which is what happened to me in the past with one particular company.
So the point is that whilst speculating on the forex markets using an online bookmaker can be a lot of fun because of the range of different markets that are available to you, you cannot expect to make a full-time income trading this way. If you are consistently profitable, then your account will eventually be limited or closed down altogether. So you are much better off sticking to your favourite forex broker or spread betting company if you want to earn a full-time income from forex trading.