Top 5 Forex Spread Betting Tips for New Traders

LONDON, February 9, 2012 /PRNewswire/ --

Forex spread betting offers a number of benefits over traditional forex trading; from tighter fixed FX spreads to greater leverage, spread betting allows for substantial gains from small movements in the market.

For many new traders, spread betting offers an affordable gateway into the world of stocks, shares, equities and currencies. Foreign exchange (often referred to as Forex, or simply FX) is one of the most popular traded financial products, providing attractive opportunities for savvy traders, even in volatile market conditions.

Meanwhile, forex spread betting requires you to deposit only a small percentage of the total value that you wish to trade. This product also enables you to go long or short and to trade across a wide range of currency pairs.

However, leveraged products can result in losses greater than your initial deposit, which is why it is important to educate yourself and understand the risks.

Here, City Index shares their top 5 Forex spread betting tips for new traders to help them to achieve more profitable trades.

1. Research & Analysis

Before jumping into a trade it is important to know how to use technical and fundamental tools so that you can trade more effectively. Some traders may rely solely on technical analysis, some may prefer a more fundamental approach, while others will use a combination of both.

You will need to learn the best approach for yourself in order to gain a more comprehensive overview of each currency pair and prepare for potential movements in the market based on trends and/or news.

2. Develop a Spread Betting Plan

Having researched their chosen currency pairs and the market, many traders take time to construct a carefully considered plan with parameters for profit goals, maximum risk allowance, trading strategies and evaluation criteria.

Trading purely on impulses can not only be dangerous, but difficult too. This is why a solid spread betting plan and strategy will not only help you to manage your trades better, but help to prevent indecision in the heat of the moment.

3. Efficient Risk Management

The City Index trading platform also provides a variety of tools to assist you in minimizing losses, locking in profits and entering the markets at predetermined levels in order to help you to seize opportunities.

Stop and limit orders can help you manage risk and protect potential profits by helping you get in or out of the market at specified prices. This also means that an effective stop loss and limit order strategy can effectively let your account run itself, giving you greater peace of mind while trading.

4. Be Disciplined

One of the most important parts of formulating a brilliant trading strategy can simply be to stick to it. However, not every trade you make will be successful. In a losing situation, it is easy to let losses accumulate in the hope that prices will turn around.

To avoid these mistakes, it is important to remember why the spread betting position was made in the first place. This is why more experienced traders tend to cut their losses quickly and run their profits to a level they expect the market to reach and they use their trading strategy and trading plans to help enforce these rules.

5. Follow the News

Because your forex trades will move in tandem with the live market and are likely to be influenced by global, social and economic events, you will be in a much better position to open new trades or exit positions by keeping up to date with market events.

However, it is easy to be tempted into trading currencies based on rumours. If you hear about a trade that interests you, do your own research to make sure that you are taking a valued and considered view.

Summary

Forex spread betting can offer a number of benefits over traditional Forex trading if you research, plan, manage your risk, are disciplined and follow the news. You can learn more about spread betting on foreign exchange rates with City Index at: http://www.cityindex.co.uk/range-of-markets/Currencies-Spread-Betting.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 in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.

SOURCE City Index