LONDON, September 15, 2011 /PRNewswire/ --
Sandy Jadeja, Chief Technical Analyst at City Index (http://www.cityindex.co.uk/), believes traders can benefit from recognising their knowledge is limited. "When you know that you don't know everything, you will remain open to opportunities, stay flexible to adjust your position if necessary and never risk everything on the one trade that you believe will be the mother of all trades."
One area in which traders do need to recognise their limits is capital. The most successful traders are bank managers first and traders second. They chip away at the markets to make regular small profits, rather than staking everything in the hope of making one giant return.
How much should you stake on a trade?
There is no blanket rule for how much of your capital you should stake on a financial spread betting position, but you should never risk everything on one trade. Playing the long-game may not be an exciting way to speculate on the markets, but it tends to be significantly more productive.
Some trading experts believe you should not risk more than 3 percent of your capital on a single spread bet or CFD trade. This means if you had £5,000 in your trading account, a single trade should never cost you more than £150.
Only you know if this particular approach is appropriate for you, but having an idea of exactly how much you are happy to lose on a trade can be invaluable. After all, the fewer decisions you have to make in the heat of the moment while on the trading platform, the better.
Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, CFD trading and, in the UK, spread betting.
We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support. Visit http://www.cityindex.co.uk/ for more financial trading information.
SOURCE City Index