Financial Spread Betting Tips

Financial Spread Betting Tips

The world of spread betting is a complex and volatile one – we all know that. We are also very aware that there is no such thing as a hard and fast rule for navigating the markets. How you trade depends on several factors: the market in question, the current economic climate, and your own preferred styles, for example. But there are some tips which are general enough to be useful to most traders, and here is a selection of them:

  • Know your market – Probably the most obvious piece of advice, but one worth repeating. Especially if you are a newcomer to a particular market, it’s worth doing thorough research into its recent and long-term history, and its likely future. Does it have good long-term prospects, or is it better to make a quick buck and get out? You could do your own research, but reputable stockbrokers will often have research teams who can help.
  • Have a plan and stick to it – Essentially, this is all about opening your spread bet with a clear idea of roughly where you want to end up. Many traders get into trouble when they stray from their original plan, either because of greed or because of ‘advice’ from others. You know your circumstances best, do not allow yourself to be too swayed by what works for others.
  • Don’t leave too early or too late – If you have a plan, then this is less likely to happen. However, there are risks for trading with too much or too little caution. Close a position too early and you risk make a small profit where you could have made a much bigger one. Close too late and you may find yourself embarrassingly out of pocket, especially in a volatile market.
  • Make use of stop losses – It may seem to take away some of the thrill, but using stop losses are not only good business sense, but they enable you to continue trading for longer and develop your portfolio. Stop losses are popular with those starting out, and those with limited capital to absorb losses. However, they are also widely used among experienced traders and most reputable stockbrokers recommend and offer them. You can make yourself even more secure by using guaranteed stop losses, but bear in mind some companies offering guaranteed stop losses will require a wider spread.
  • Practice makes (almost) perfect – It’s a really good idea if you’re a first time trader, or if you are moving into a new market or style of trading, to practice first. The best stockbrokers these days will have a programmes you can download from their websites often free of charge which will allow you to practice trading. The programmes simulate realistic market conditions so that when you start to trade for real, you will feel equipped with the necessary skills. Often the same companies will have research teams and specialised advisers who will be able to give you in-depth and current market analysis. Training can only ever be a good thing in derivatives trading.

These tips are only general and clearly do not take into account the quirks of specific methods or markets. However, they do offer guidance to keep you strong and steady on your spread betting journey. Good luck!

Risk warning: Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

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