LONDON, January 28, 2011 /PRNewswire/ -- Spread betting can be challenging. If it was easy, everyone would be doing it. Even if you know the basics, it is always helpful to broaden your knowledge. With this in mind, spread betting and CFD trading provider City Index (http://www.cityindex.co.uk/) looks at some advanced techniques that could be of use on your spread betting journey.
1. Identify what kind of spread bettor you are.
Are you a day trader? Do you have a 'get in and get out' attitude to spread betting (http://www.cityindex.co.uk/spread-betting/)? Or are you a position trader? Do you hold onto a trade for weeks or even months, biding your time for a target price? Whatever your tactics, it is important to recognise your own strengths, weaknesses and preferences when formulating a trading plan.
2. Have a trading strategy.
Many traders spread bet with their hearts, buying and selling purely on guesswork and feelings. Trading without a strategy is a sure-fire way to maximise your losses. Trade with your head, not your heart. Develop a trading strategy and stick with it.
3. Do not exit a trade too early.
It can be tempting to end your trade as soon as it has made a slight profit, but what if the market keeps moving in the same direction? Do not be hasty - try to let your profits run. Stick to your trading plan and end the trade at your predetermined point. This can be done automatically using limit orders, so you do not even have to sit and watch the markets ( http://www.cityindex.co.uk/range-of-markets/). But be wary, as a trade will not go your way forever.
4. Do not stay in a trade too long.
It can be easy to get greedy. But remember, the markets can go down as well as up. If you hold a profitable trade for too long, you may see your position weaken. Stop when your plan tells you to - do not stay in 'just ten minutes longer'. Similarly, if a trade has not gone the way you hoped and is making a loss, just get out of there. Do not watch your money dwindle away while you wait for the market to recover, as it may already be too late.
5. Do not set your stop loss too high.
Picture the scene: You log in to your City Index spread betting account and place a trade on the Wall Street index. Mere seconds later the position closes out, leaving you with an embarrassing loss. So what happened? Chances are you placed your stop loss too close to your opening position. Markets, particularly volatile ones, need a bit of breathing room to fluctuate before they start performing.
6. Do not trade with money you do not have.
Spread betting is a leveraged product, but that does not mean you should be trading the maximum amount available. Keep a cool head and only trade with what you can afford.
7. Keep learning.
Remember, you can never have too much spread betting knowledge. City Index offers regular free spread betting seminars ( http://www.cityindex.co.uk/learn-to-trade/seminars.aspx) where you can learn more about financial trading whatever your level of experience.
Find out more about financial spread betting at:
http://www.cityindex.co.uk/spread-betting/
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 (http://www.cityindex.co.uk/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.
Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
Spread betting and CFD trading are exempt from UK stamp duty. Spread betting is also exempt from UK Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.
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