How keep Spread Betting Power On Your Side
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?
Several instruments exist. But stick to the basic rules of any investor - invest in what you know. If you follow a certain industry or company, or if you follow certain derivatives, currency or commodity movements, then keep focused on the instruments which are 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 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, taking the positive expectation, when a trade price moves in your favour, what is the best rule for deciding when to take profits. This depends on your own time allocation to spread betting each day and your needs for speculative income. But generally try to take profits when you have reached 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 have some fun.
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 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?
Several instruments exist. But stick to the basic rules of any investor - invest in what you know. If you follow a certain industry or company, or if you follow certain derivatives, currency or commodity movements, then keep focused on the instruments which are 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 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, taking the positive expectation, when a trade price moves in your favour, what is the best rule for deciding when to take profits. This depends on your own time allocation to spread betting each day and your needs for speculative income. But generally try to take profits when you have reached 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 have some fun.
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.
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