For those looking to get in to financial spread betting, there are literally thousands of markets on which you can trade such as the FTSE. The wealth of variety is one of the reasons why spread betting is so popular. Spread bets allow you the opportunity to speculate on price movements- whether or not they shall rise or fall. So should you find stocks and shares too costly to trade, spread betting could offer an interesting alternative. If you are thinking of giving it a go then here, are some of the methods used by experienced traders.
Developing confidence in your ability to trade
Should you be new to trading or are experiencing a poor run of luck, you may wish to play by using a demo account. This allows you to trade free of fear or risk and develop your understanding and intuition.
When you do progress to playing with real money, start by trading the minimum amount so you can take some of that risk-free attitude over to real-world trading. Most trading platforms will allow you to place bets for as little as £1 per point. The profit potential shouldn’t be a factor at this point as it is the experience in being able to read the markets that are important initially.
Keeping an eye on the margin
As traders are only required to make a small deposit, beginners sometimes use up their margin with their opening trade should they find that the market is going against them.
However, they then find that they are only left with a low amount of surplus as cover for fluctuations of price. If they don’t have enough funds in their account, they are unable to sustain a loss. Then, when the market moves in their favour, they are in a position to earn a profit.
Avoiding unnecessary risks
An unwritten rule often cited in gambling is only bet money that you can afford to lose. If you are using your rent money to place trades, you are increasing your odds of failing as you will unlikely make rash decisions if the consequences are too high.
Placing closing orders
A number of trading platforms include closing orders- i.e. Limit orders and stop losses.
Some traders opt to pay a small fee to place Guaranteed Stop Losses in some markets. This ensures that they won’t lose more money when paying the difference between stocks that close higher at the end of the day than they open the next.
You can also use Limit Orders to cash out a trade automatically when a predetermined profit level has been reached. This won’t see achieving the highest potential profit, but it can help you in minimising losses by ensuring any profit is achieved before the market moves against you.
Don’t average down
To average down means that you increase your position when the market is moving away from you. Conversely, it can be sensible to increase your position if the market is moving in your favour. For example, if you open at £1 per point on the FTSE at 5,000 with a stop loss at £4,900 and the market moves to 5100, you profit by £100. You can then buy a further 50p and move your stop loss to 5000. If the market suddenly moves away from you, you will break even on the £1 point a point trade and be £50 up on the 50p a point trade
Maximising your profit potential
It may be tempting to place large trades on a single market- but one bad call can have serious repercussions. By diversifying your trades, you are providing yourself with a safety net. Spread traders have instant access to over 12,000 markets- plenty of opportunity to diversify your trades!
Being patient with trends
Let your profits build up steam. You should allow a profitable position to keep running and avoid closing your bet too early just to take a profit.
Abiding by your own rules
Avoid making a rash decision based on what you are told. There is a wealth of information available today- whether in magazines, newspapers, the TV or the internet. Stick to the rules that you have set for yourself.
The above aspects are just some that you will need to gain a firm grasp of trading. It is up to you which ones you choose to implement. By working with a spread betting company that offers you the best available resources you’ll be able to concentrate on the fundamentals of your approach to trading.
You can enjoy financial bettingwith all of the tools you possibly need at Cantor Index. They are always happy to help traders who are new to the activity and will provide all of the support that they can. Trading with a respected company will ensure that you are in safe hands. Their advanced tools help you feel confident about spread betting UK and other markets and will assist in steering you along the right path at the start of your trading career. You can begin by opening a spread betting demo account, this will help you familiarise yourself with their tools and provide you with invaluable experience.