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:
Don’t even think about placing a trade without first taking
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 down 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 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.