If you are thinking of starting up and online trading account with a company like CMC Markets, there will be many options available to you for which type of trades you wish to trade. Being successful with trading depends on many factors, including choosing the best way to trade for yourself. Spread betting offers literally thousands of different markets to engage with. Here are some tips for anyone thinking about starting out in spread betting, or anyone looking to gain a bit more experience.
Know your chosen market or markets
When you start out, the options may seem overwhelming and endless. There are so many different markets to get into via the spread betting route. If you are a new trader, and you are unsure how successful you will be, start out with a small number of markets that you know really well. Understanding the underlying market will help you to be profitable, so don’t try and do too much too soon.
Set yourself targets
The only way you will trade effectively and quantify success is to set yourself. Have a clear trading strategy before you start, and make a deal with yourself to stick with it as much as you can. The more you chop and change strategies, the more chance you have of making a loss. Consistency is key, and be it that you go it alone or discuss with a financial advisor, you still need to have it clear in your mind what you hope to achieve before you start out.
Try not to overtrade
Overtrading is a common mistake in spread betting markets, and if you can stop yourself from doing it you will be ahead of the curve. It is also a great idea to stop yourself from trading more than you can afford to lose. As with any investments, spread betting carries quite a lot of risk, so you need to be mindful of this before you open a trading account.
Use stop losses to manage risk
If you are trading online, you can use a tool called ‘stop losses’ to manage the risk of your investment. Although there is a small additional charge for this, it will save you money in the long run as the trade will automatically be made when it hits a certain price. If you cannot monitor your trades every day, this is a really good way to keep on top of things and give yourself some peace of mind.
Try not to trade impulsively
Spread betting is a fast game, and it can be easy to get caught up in the excitement of it all and trade impulsively. Some traders to get emotionally attached to certain markets, and this is no good if you want to keep a balanced spread betting portfolio.
Don’t put all of your eggs in one basket
Although you should stick to markets you know, in trades which carry the risks of spread betting you also want to make sure that you spread your risk out a bit as well. The best way to do this is to use a few small markets that you are knowledgeable on to spread out your investments to ensure you will still be on an even keel if one loses. If you are only knowledgeable in one market, try and do different trades on similar markets to your own so that you still have an element of risk spreading.
Don’t listen to rumours
Rumours are the death of all good spread betting traders. Although you need to keep yourself well informed and up to date on market activity, make sure that you have firm facts before you execute a trade. Trading off of the back of ‘might do’s’ is the easiest way to lose on your portfolio. Use as many resources as you can to keep up to date on market movements and trends. You can use news sources to keep abreast of things. Another great tip is to set yourself up Google alerts for your markets. This way, you will get an email on a daily basis to see what is happening real time.
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