How keep Spread Betting Power On Your Side
Share trading and spread betting power can lead to winning or losing vast sums in a very short time. Now you can easily set up your own trading accounts and limit your losses, through setting up and then monitoring your "Stop Loss" positions. So the spread betting power really is under your control. How would you conclude what types of instrument to invest in, what stop loss limits to set, when to take profits or when to sit tight?
Several instruments exist. So follow the basic rules of any investor - stick to what you know. If you follow a certain industry or a group of companies, or if you follow certain derivatives, currency or commodity movements, then keep focused on the instruments available for them. Also do not bet on instruments that are too far "Out-of-the-money". Unless you have particular specialist understanding, stay close to spreads that are in the last six months of trading ranges.
You should never allocate more than 30 percent of your available capital to riskier investments. And from this, no more than half to Options Trading or Spread Betting. Then your stoploss limits should always allow you to preserve at least two-thirds of your available risk capital. Otherwise, if you enter a losing run for reasons of judgement or luck, you will not leave yourself with sufficient level of cushion to sustain trading losses. Be careful not to set limits too tightly though, as price volatility that is normally invisible to the eye can cause an automatic close and a hefty loss. Better to set the stop loss to lose only up to one third of your deposit, then sustain that on a particular trade if the movement goes against you. Be wary also of groups of professional traders who exaggerate the volatility in order to 'flush out' amateurs from the market.
Now, being positive, when a trade price goes in your favour, what strategy do you follow to take profits. This depends on your own time allocation to spread betting each day and your own needs for speculative income. But generally try to take profits when you have made your daily cash target. Close it and log out. Feel the adrenalin surge of winning and then close your pc or device and move on to do something else.
Otherwise try to take your profits when you have made a 100% return on your deposit. Generally, this has to yield more than waiting for a higher return, like 200%. Remember markets are full of traders just like you with more at risk -so some will take their profits earlier and then re-invest in a cyclical counter-move in the market price. Expect volatility and ride with it, unless you have specific foresight on a likely major re-rating of the particular instrument.
Never fall in love with your favourite instruments for too long and never sit on a running profit for more than a couple of days. And never bemoan lost opportunities or wrong decisions. Just focus on the future. And use positive energy on making more correct winning judgements.
Share trading and spread betting power can lead to winning or losing vast sums in a very short time. Now you can easily set up your own trading accounts and limit your losses, through setting up and then monitoring your "Stop Loss" positions. So the spread betting power really is under your control. How would you conclude what types of instrument to invest in, what stop loss limits to set, when to take profits or when to sit tight?
Several instruments exist. So follow the basic rules of any investor - stick to what you know. If you follow a certain industry or a group of companies, or if you follow certain derivatives, currency or commodity movements, then keep focused on the instruments available for them. Also do not bet on instruments that are too far "Out-of-the-money". Unless you have particular specialist understanding, stay close to spreads that are in the last six months of trading ranges.
You should never allocate more than 30 percent of your available capital to riskier investments. And from this, no more than half to Options Trading or Spread Betting. Then your stoploss limits should always allow you to preserve at least two-thirds of your available risk capital. Otherwise, if you enter a losing run for reasons of judgement or luck, you will not leave yourself with sufficient level of cushion to sustain trading losses. Be careful not to set limits too tightly though, as price volatility that is normally invisible to the eye can cause an automatic close and a hefty loss. Better to set the stop loss to lose only up to one third of your deposit, then sustain that on a particular trade if the movement goes against you. Be wary also of groups of professional traders who exaggerate the volatility in order to 'flush out' amateurs from the market.
Now, being positive, when a trade price goes in your favour, what strategy do you follow to take profits. This depends on your own time allocation to spread betting each day and your own needs for speculative income. But generally try to take profits when you have made your daily cash target. Close it and log out. Feel the adrenalin surge of winning and then close your pc or device and move on to do something else.
Otherwise try to take your profits when you have made a 100% return on your deposit. Generally, this has to yield more than waiting for a higher return, like 200%. Remember markets are full of traders just like you with more at risk -so some will take their profits earlier and then re-invest in a cyclical counter-move in the market price. Expect volatility and ride with it, unless you have specific foresight on a likely major re-rating of the particular instrument.
Never fall in love with your favourite instruments for too long and never sit on a running profit for more than a couple of days. And never bemoan lost opportunities or wrong decisions. Just focus on the future. And use positive energy on making more correct winning judgements.
About the Author:
Learn from others on Trading With Options For Success and follow daily advice to achieve Spread Betting Power. This article, Spread Betting Power To Make More From Day Trading has free reprint rights.
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