With spread betting you trade on leverage to make potentially faster gains (although this comes at a greater risk) and you can spread bet in order to ''hedge'' more traditional trades. Because of the risks involved, it''s important you research spread betting before you become active. Here''s three tips for rookie spread betters.
Start Small - Too many people starting out in spread betting lose large sums of money simply because they''re not entirely sure what they''re doing. It''s a bad idea to bet big early on, only to see your portfolio ruined by a few rookie errors.
It''s important that you start small and don''t make large risky bets during the first few months of your account opening. A maximum bet of ?1 per point is a good idea at this stage. Using this strategy will certainly put you in a better stead than many other spread betting beginners.
Use a Simulator - Even if you''re an experienced stock market investor, the interfaces of spread betting can get complicated. To make sure you''re up to speed on using the interface, it''s a good idea to open a simulator account. After a few test runs it should mean you don''t make as many mistakes.
If you do well on the simulator, it''s important not to get carried away and believe you''ll mirror your success by using a real account. A simulator should help you understand the ways of the spread betting interface, rather than a training exercise on how ''good'' you can be.
Stop Losses - Using stop losses is vital if you''re going to eliminate serious risk from your trades. It may seem frustrating to see a move in a positive direction stopped if it continues to go higher, but you''ll be thanking it''s in place if the markets move against you, which could devastate your account.
If you don''t use stop losses, then it''s quite possible that one ill informed or unfortunate trade could devastate your account and end with you owing the provider more money than you started with. It''s a basic technique that should be employed with every trade.
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