Spread betting is increasing in popularity because it is a trading tool used in wagering for all outcome of an event. It has made a major growth in UK with almost one million in numbers. It enables traders to profit from variety of global markets such as individual shares, currencies, commodities like crude and oil and bonds. Some of the benefits of this type of betting include but not limited to its inexpensiveness, flexibility, excellent online trading platforms, 24 hour non-stop operation and single account can be used to trade and most importantly, it is tax free.
There are some tips to a successful spread betting that will further help you understand the trade.
Trade small positions when starting out
The most common problem by the people new to this kind of betting is that they bet too much per trade. Try at least for a few months to be at a maximum of $2. Be smart in doing that and in no time you will be way ahead than most of the new traders.
Intelligently vary your trading size
Learn how to read the market so you can decide on the bet amount. Bet with a small amount if the risk is too high and aggressively increase your bet size if the risk is low.
Limit your stakes
Like any business, trading is about controlling costs. Trading costs can be summarized as commissions and the bid-offer spread. Always keep an eye on your total cost because this is far more important than what you may think.
Profit and loss
This is never about right and wrong. Spread bets is definitely all about made profit or suffer some loss. It is how you strategically keep your losses small and the profit large. You need to set a maximum loss target to avoid losing big in this trading game.
Be patient
Get some strategy, watch the market and look for larger profit but less risk.
Get specialize in few markets.
Do not try to get involved in too many types of markets. It can be tempting but you may try to just have a handful so you can master the personality of each market. If you are just new to spread betting, 2-3 markets is advised.
Have a trading system
Record all trading gains and losses, win-loss ratio, as well as your closed and open positions. Do not rely on trading systems and strategies offering seminars on spread betting because this can be really expensive and it will draining your money down right before you can start to trade.
Make use of ‘Stop Loss’
Do not be over confident in trading, remember that in spread betting losses count more than the gains and do not rely on hope. You need to use stop loss orders to prevent your losses goes even further and further. Keep your losses to a manageable level but not too tightly. It is also recommended to be flexible with your stops.
Experiencing spread betting can be really fun and lucrative if you know how to play your cards right. One has to make sure they fully understand what and how spread betting works before they plunge themselves in. Always remember that in this type of betting, winning is good and losing is not and trying to win too much money too quickly may lead to more losses.