LONDON, December 17, 2010 /PRNewswire-FirstCall/ -- When you are financial spread betting, it can be easy to focus purely on the spread bet in hand. Whilst this is clearly important, it is equally vital to pay attention to what is going on elsewhere on the trading platform and even beyond it. Here, spread betting provider City Index ( http://www.cityindex.co.uk/) looks at the ways in which traders spread bet with the bigger picture in mind.
Having a spread betting strategy
Some spread bettors can become so emotionally invested in a position that they make risky impulse decisions. A disciplined spread betting strategy separates the emotion and spontaneity from your trading, allowing you to approach the trading platform with a calm, clear head. What is more, by planning your entry/exit points, stop losses and limit orders before you place a spread bet, you can then spend less time watching that particular trade and dedicate more time to spotting wider developments that may affect your position.
Cutting losses
Remember, in spread betting (http://www.cityindex.co.uk/spread-betting/) your ultimate focus is your bottom line - not each individual trade. Do not be too proud to cut your losses if a spread bet is moving dramatically against you. Sometimes, it is easy to let a spread betting loss snowball in the hope that the market will soon turn around, but by exiting negative positions early you can help to minimise the damage, learn from the loss and survive to trade another day.
Being aware of the news
From daily market commentaries ( http://www.cityindex.co.uk/market-analysis/market-commentary.aspx) to the financial newspapers and websites, making use of every resource available to you will maximise your knowledge of your spread betting markets. When you place a financial spread bet on a market, you need to know how the market moves, what affects its movements, what external developments might cause volatility and if there are any forthcoming announcements which may spark a change in direction.
Understanding market reactions
Knowing what can affect the supply and demand or profit levels for a particular company may sound somewhat basic, but this is frequently the essence of market movements. For example, if you were spread betting on British Airways shares and then noticed a spike in crude oil prices, understanding that this movement may result in downward pressure on BA prices (as a rise in oil prices might increase the costs of an airline flying passengers all over the world and could consequently influence earnings) will give you the opportunity to react quickly and effectively.
Keep learning
Spread betting seminars ( http://www.cityindex.co.uk/learn-to-trade/seminars.aspx) are not just for the benefit of absolute beginners. Providers such as City Index now offer workshops centred around technical analysis, upcoming spread betting opportunities and candlestick charting patterns, all of which are led by market experts and are designed to further improve the skills of the more experienced trader.
For more on risk management in spread betting, just visit
http://www.cityindex.co.uk/spread-betting/how-to-manage-risk.aspx.
Alternatively, you can sign up for your City Index spread betting demo account at http://www.cityindex.co.uk/learn-to-trade/demo-account.aspx.
Spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
SOURCE City Index
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