How keep Spread Betting Power Working For You

Share trading and spread betting power can lead to winning or losing vast sums in a very short time. Now you can easily set up your own trading accounts and limit your losses, through setting up and then monitoring your "Stop Loss" positions. So the spread betting power really is under your control. How would you conclude what types of instrument to invest in, what stop loss limits to set, 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 put more than 30 percent of your available capital allocated to riskier investments. And from this allocation, no more than half 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 ill-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 purposely exaggerate the volatility in order to 'flush out' amateurs 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.

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.

Try not to fall in love with your favourite trades 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.Instead focus on the future. And use positive energy on making more correct profitable decisions.