Getting the best out of spread betting can be a little tricky, because while the gains are quicker and often large, the losses are generally higher than traditional trading. Therefore it is best to know a bit about spread betting before you dive headfirst into the unknown. With a few tips you’ll be able to manage your time trading efficiently, as well as your funds. Here are a few tips to help you on your way to getting the best results out of using City Index and other established brokers.
Try a Demo Account
Demo accounts at online trading brokers are great ways to get familiar with trading platforms, instruments and methods of trading – in this case spread betting. Most brokers will provide this service. You are given virtual funds with which to try out spread betting, helping you understand how aspects of it work. You’ll also receive the benefit of seeing if the online broker is actually up to your standards.
Stick To the Markets You Know
Most of the experienced and successful traders tearing up the markets today have achieved what they have by becoming highly familiar with certain markets, as opposed to jumping around between various trading instruments. If you have more knowledge of shares than commodities then put your spread betting efforts towards spread betting on shares.
Set Yourself Limits
As with any form of betting it is advisable to set yourself targets and limits so that you do not start bleeding money. Setting a stop loss order will prevent your losses exceeding a certain limit, negating the abrupt depletion of trading funds. Set yourself a trading plan, such as how much you are prepared to bet on a specific day. Also make sure that you manage your funds effectively. You don’t want to spend all your money on an opening trade. Start with smaller trades and work your way up as you build experience. It might be a good idea to also set a target of how much you’ll like to take home from gains each day.
Keep An Eye On The News
Spread betting is a great way of trading when you have a good idea of what the market is going to do. This is because spread bets are made for the short term, and the returns from a successful bet are free from tax. Therefore it is important to constantly be monitoring events sending prices one way or the other, such as GDP figures and interest rate decisions. Depending on the outcome of these heavily weighted decisions you should be ready to pounce and take advantage.
With the vast wealth of knowledge at our disposal it is important to read up on markets and trading trends as often as possible. There are plenty of online trading brokers which provide detailed tutorials and opinion pieces by professionals which keep traders up to date with happenings in the trading world. Spread bettors will benefit greatly from this literature, as the possible losses from spread betting are generally greater than with other forms of trading. All the tips and tricks that can be obtained must be embraced.
In conclusion, we can’t stress enough that spread betting brings higher returns at a quicker rate than most forms of trading, but the losses are also substantially high if you do not maintain a disciplined trading strategy. Keep a level head, and don’t attempt to bite off more than you can chew. Stick to your strategy and don’t let emotions get the better of you. Along with these tips, spread betting will be an enjoyable experience for you.