Get the right balance of risk and return from spread betting
Share trading and spread betting power can be the route to winning or losing vast sums in a very short period. These days you can easily set up trading accounts and limit your losses, through setting up and then monitoring your "Stop Loss" positions. So the spread betting power really is in your hands to exploit. How should decide what types of instrument to invest in, how to set your stop loss limits, when to take profits or when to sit tight?
There are thousands of instruments available to you. So you have to follow the basic rule of any type of investing - stick to what you know. If you follow a certain sector or group of companies, or if you follow certain currency or commodity movements, then keep focused on the instruments available for them. Also do not bet on too far "Out-of-the-money". Unless you have particular foresight, stay close to spreads that are in the last six months of trading ranges.
You should never apportion more than thirty percent of your available capital funds allocated to riskier investments. And from this allocation, no more than half of it towards 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 poor judgement or uncontrollable bad-luck, you will not leave yourself with sufficient 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. It is recommended 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 allegedly sometimes exaggerate the volatility in order to 'flush out' part-timers or novices 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.
Probably try to take your profits when you have made a 100% return on your deposit or margin funding. Normally, 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 reactive counter-move in the market price. Anticipate this volatility and ride with it, unless you have specific foresight on a likely major re-rating of the particular instrument.
Don't get too attached to your favourite trades for too long and never sit on a running profit for more than two days. Do not reflect on lost opportunities or wrong decisions. Instead focus on the future. And use positive energy on making more correct profitable decisions.
Share trading and spread betting power can be the route to winning or losing vast sums in a very short period. These days you can easily set up trading accounts and limit your losses, through setting up and then monitoring your "Stop Loss" positions. So the spread betting power really is in your hands to exploit. How should decide what types of instrument to invest in, how to set your stop loss limits, when to take profits or when to sit tight?
There are thousands of instruments available to you. So you have to follow the basic rule of any type of investing - stick to what you know. If you follow a certain sector or group of companies, or if you follow certain currency or commodity movements, then keep focused on the instruments available for them. Also do not bet on too far "Out-of-the-money". Unless you have particular foresight, stay close to spreads that are in the last six months of trading ranges.
You should never apportion more than thirty percent of your available capital funds allocated to riskier investments. And from this allocation, no more than half of it towards 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 poor judgement or uncontrollable bad-luck, you will not leave yourself with sufficient 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. It is recommended 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 allegedly sometimes exaggerate the volatility in order to 'flush out' part-timers or novices 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.
Probably try to take your profits when you have made a 100% return on your deposit or margin funding. Normally, 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 reactive counter-move in the market price. Anticipate this volatility and ride with it, unless you have specific foresight on a likely major re-rating of the particular instrument.
Don't get too attached to your favourite trades for too long and never sit on a running profit for more than two days. Do not reflect on lost opportunities or wrong decisions. Instead focus on the future. And use positive energy on making more correct profitable decisions.
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