Being FSA regulated, we cannot give you spread betting tips per se, but we can give you some
'Golden Rules' that might help you get started and make the most from your financial spread betting.
1. Do your research:
Before you open a position on a particular market, first take a look at the latest news on the product
you want to trade – are there any earnings announcements or key economic data coming out that could
affect your trade? Where is it in relation to its recent highs and lows etc? Only when you think you
have as much information to hand on your product should you then place your trade.
2. Check the charts:
Look at the chart of your product and see if it gives any important signals. Is it finding resistance or
support around its current level? Where are its Moving Averages? If you know what they mean, check out the
Relative Strength Index, Stochastics and Moving Average Convergence Divergence to see what kind of signals
they are displaying.
3. Paper Trade:
This is more for those starting off, but it can be very beneficial to ‘paper trade’ for a while. Pick a trade
you intend to do, write it down and follow it to its conclusion. Do this until you feel comfortable with your
trading ideas.
4. Have a plan and stick to it:
When you enter a trade, do it for a reason. Maybe at first, write down why you placed the trade. If you do not
have a reason to place the trade, then don’t. Plan where you are going to put your stop loss and why, and plan
where you intend to take a profit and why. Also think about moving your stop loss closer to your entry price to
guarantee a profit if the trade starts going your way.
5. Trade with your head, not with your heart!:
Don’t buy something just because it went up last time you bought it, or sell Diageo because you don’t like Guinness.
6. Don’t chase your losses:
If you have just been stopped out of a trade for a loss, don’t rush in to try to get back what you lost – you are
just gambling then, unless you have a very valid reason for placing the trade. Take a little while to reassess the
situation and think – ‘if I hadn’t just taken that loss, would I still want to place this trade?’ If the answer
is ‘No’ then don’t.
7. Be prepared to take a loss:
If something starts to go against you and your new assessment of the situation is that this is going to get worse
rather than get better, get out of the trade. There is nothing worse than sitting, hoping that something will come
back when you know it probably won’t. It’s probably best to take a loss and move on.
8. Try not to hit the home run every time:
Take a profit when it presents itself if you think that this might be as far as it might go for now. Don’t try to aim
for the 500pt+ moves every time, as the old trading adage goes – ‘you’ll never go broke taking a profit’.
9. Don’t try to ‘catch the falling knife’:
If something is in freefall, don’t be tempted in to thinking this is the bottom and then to start buying in. That can
often be a very quick way to lose a lot of money. Wait until it has shown solid signs of bottoming out and then get it.
Better to lose some points on the way back up than lose a lot on its way down.
10. Learn to use limit orders:
Time is limited for most of us – plan your trades when you get a chance maybe in the evening and place limit orders so
you don’t have to be watching a screen all day or miss out on a trade because you are tied up.