Start out small
Financial Spread Betting is like anything else. You need to get used to it. And like everything else, you are more likely to make mistakes when you are a novice. So take that pain out of the learning curve by starting small. True, your wins won't be so big, but then neither will your losses. As your understanding and confidence grows you can increase the size of your bets. But remember the golden rule. You only ever bet what you can afford to lose.
Make money on both the ups and downs
This may sound obvious, but it is so often overlooked. Investors by their very nature look for winners. It's the 'up' mentality. And that's right if you are an ordinary equity investor. After all, it's very difficult for the average share trader to sell 'short'. But one of the key things with Financial Spread Betting is that you can bet on a price falling as easily as you can bet on a price rising. Twice the opportunity to make money!
Cut your losses and ride your winners
This really is at the heart of most successful financial spread betting strategies. It's also basic common sense but you'd be surprised how often it isn't applied. Key to getting this right is to use the stop loss facility in your account. Set your stop loss at the outset of each trade to the maximum you would be comfortable to lose. Many traders choose to set it at 2 or 3% of their total account balance. If the trade goes against you, it gets automatically closed out and your loss is fixed. If the trade goes in your favor, keep moving the stop loss up. When it finally turns your stop loss will then lock in most of your profit
Give it a rest
You can get too involved. Sometimes it helps if you stop trading altogether for a short while. Without being tied into open positions you can analyze your recent performance and decisions with the clarity of hindsight. How is your return looking? Would you have made any different decisions with hindsight? Learn from both your successes and also your failures. Write down your learnings and start afresh.
Don't rely on technology too much
This is a personal one I admit. Some people love their software systems, and their fancy algorithms, whereas others prefer to follow fundamentals or the market sentiment. My point really is that even if you love your software derived bets, please make sure you follow the other basics outlined above. That way you can at least eliminate the potential on the downside.
Stuart Smith writes widely on Financial Spread Betting subjects and is the owner of leading website http://www.financialbetting.co.uk
Article Source: http://EzineArticles.com/?expert=SS_Smith
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