LONDON, February 11, 2011 /PRNewswire-FirstCall/ -- To become a spread betting expert, you have to consistently evaluate your strategies and techniques. With this in mind, spread betting provider City Index (http://www.cityindex.co.uk/) poses three starter questions to think about when placing your next trade.
1) Do I know this market well enough to spread bet on it?
Every spread bet that you place needs to be carefully researched and thoroughly thought through. If not, you run the risk of overlooking a crucial detail that may affect the market in a big way. For example, the price movements of commodities such as soybeans, wheat and pork bellies can be influenced by everything from political decisions and weather forecasts to crop reports and seasonal factors. Spread betting with any kind of frequency requires you to be completely up-to-date with the developments that may affect your markets.
2) What is the maximum amount I am prepared to lose on this trade?
Financial spread betting (http://www.cityindex.co.uk/spread-betting/) is difficult and even the best traders make a loss from time to time. Therefore it is important to consider how much you are willing to stake on a spread bet - and also how much you are willing to lose on it. By doing this you can set out your stop losses in line with your expectations and consequently accept your worst-case scenario before you even open the spread betting position.
3) What is happening in the news which relates to this market?
You should never open a spread betting position on a market without fundamentally understanding how it moves, how its price movements are affected and how volatile it can be. For instance, if you were preparing to place a spread bet on British Airways shares without knowing that a spike in crude oil prices may force BA's price downwards, you would probably be fighting a losing battle. Understanding a market means that you can react swiftly and effectively as relevant news emerges.
To learn more about financial spread betting, visit http://www.cityindex.co.uk/spread-betting/ Alternatively, see a list of upcoming free spread betting seminars at http://www.cityindex.co.uk/learn-to-trade/seminars.aspx
Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, contracts for differences (CFDs) and, in the UK, spread betting.
We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support.
SOURCE City Index