LONDON, October 28, 2011 /PRNewswire/ --
In spread betting, timing is crucial. The points at which you open and close a position will dictate the size of any profit or loss you eventually make.
As Joshua Raymond of City Index (http://www.cityindex.co.uk/) states: "The key to financial spread betting is making sure your total profits outnumber your losses. When traders take profits too early and run their losses, they are already making life difficult for themselves."
A 2010 study commissioned by Barclays Wealth analysed the actions of retail investors investing in equity mutual funds between 1992 and 2009. The study revealed that the market timing decisions made by the investors actually slashed their returns by an average of 20 percentage points over the 18-year period. So how can you improve your ability to enter and exit trades at the right time?
Entering a spread bet
When financial spread betting, do you do extensive homework before every trade? Or are you an instinctive spread bettor, basing most of your trading decisions on hunches? Traders who understand the way a market moves and what might affect that movement will be in a stronger position to time their entry to a spread bet. Remember, all successful traders know exactly why they have entered a trade.
Exiting a spread bet
Your exit from a spread betting position is just as important as your entry to it. Sandy Jadeja, Chief Technical Analyst of City Index, says: "As a trader it is easy to enter a position hoping it will move in your favour forever. But at some point the market will turn and you may find yourself holding on for dear life wishing that your position would turn from red to black. The key to long-term success is knowing when you should cut a losing position."
A strong understanding of your market and the news activity surrounding it will pave the way for timely spread betting exits. You can also put in place stop losses and limit orders to automatically close your spread bets at set trigger prices.
Ultimately, the more time you dedicate to understanding the markets, the stronger your chance of making a spread betting profit. With this in mind, you can keep up with all the latest activity at http://www.cityindex.co.uk/market-analysis/
Alternatively, practice trading the markets with a £2,500 virtual cash balance by opening a free City Index demo account at http://www.cityindex.co.uk/learn-to-trade/demo-account.aspx
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, financial 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. Learn more about spread betting at http://www.cityindex.co.uk/.
SOURCE City Index