Tips to successful spread betting
Welcome to my spread betting tips page. If you are looking for me to ‘Tip’ you the next big stock to buy then I’m afraid you have come to the wrong place. If on the other hand you are looking for the benefit of someone elses spread betting experiences and tips then you are in the right place.
I have been spread betting for a while now and I have learnt a lot of things along the way. Here I aim to share those experiences and tips with you. I blog on a regular basis documenting my progress as a spread betting beginner. The thing is some blog posts contain lessons that I have learnt along the way within the post itself. This page is dedicated to listing those lessons to save you back tracking through all my blog entries.
As I learn new lessons and tips I will update this page with the most recent tips at the top of the page. So keep checking back for the latest spread betting tips and tricks that I have learnt.
If you have your own spread betting tips that you would like to share with others you can post them at Spread Betting Talk. If we all share our tips and experiences with others it makes us all better spread betters.
Just so we are clear, please read my disclaimer
Spread betting beginners top tips! (Not tip tops!)
FYI, these are in no particular order, just because the tip is at the top does not mean it is the top tip.
- Read Read Read
- Learn from the experience of others
- Trade to a strategy or trading plan
- Manage risk to 1% or less
- Don’t Boredom trade
- Never click the buy or sell button
- Don’t Trade the FTSE (Or any other indices or currency pairs) for at least a YEAR!
If your new to spread betting you’ll soon realise that it can be a tough nut to crack. It will take time an patience before you get to grips with it and you will need to have some kind of education plan in place. There are many courses that will offer to teach you everything you need to know about spread betting for a hefty fee. I would suggest before you spend out many hundreds of pounds on trading courses buy some less expensive books. You can check out my reading list for the books that I’ve read so far.
So this spread betting tip is to read, read and read some more. Even if you only start with one book I would strongly recommend doing this before paying for costly courses. Also search the web or even read through this site. I can’t say for sure but from what I’ve heard there is not much that these courses offer that you cannot read in books anyway. If you are serious about spread betting you should be treating it like a business. You wouldn’t start any other business with out having a clue what your doing so why would you trade that way? “Failure to plan, is a Plan to Fail!”
Spread betting is a very difficult business. I started spread betting thinking how hard can it really be? People make millions of pounds every day trading stocks and shares surely I can make a few hundred. I soon discovered that I was very wrong to think this. Financial spread betting, like any form of trading, requires a great deal of knowledge, skill, self discipline and experience.
So my spread betting tip is to use others experiences to their full extent. The whole reason I started this site is to share me experience with others. I know it’s a difficult thing to do, learning from someone elses experience, but if you can it will be a big help on the path to spread betting success. You can always ask any questions you might have over in Spread Betting Talk or check out the tips section to see if others have already posted any useful spread betting tips.
When I first started spread betting, I thought how hard can it be. People make millions of pounds everyday trading stocks and shares, surely I can make a £100 a day. Boy how wrong was I. It didn’t take me long to realise there is more to spread betting or trading than meets the eye. I knew if I was going to make a success of it then I would need to learn more about it.
I started with The Financial Spread Betting Handbook: A Guide to Making Money Trading Spread Bets, which in my view is a great place to start for anyone new to spread betting. It will teach you the basics and has some excellent advanced strategies to get you on the way. Which brings me onto the topic for this tip. Trade to a strategy or trading plan.
You need to have a strategy or trading plan in place, otherwise you are just gambling. Strategies don’t have to be difficult or complex, take a look at my super trend strategy. I can be as simple or as complicated as you want to make it. The important thing to take from this tip is that you have a strategy or plan in place. Once you have it clearly defined, stick to it! If you are looking to develop your own spread betting strategy you should check out my strategy development page.
One thing that is a must if you are to become a successful spread better is to manage your risk. It’s widely accepted that you should manage your risk to 1% of total funds. If you are new to spread betting then you may wish to manage your risk at a lower level of 0.5% or 0.25%. I think that this risk management is the only reason that I am still spread betting today. To start with I didn’t follow this rule religiously but now I do. Out of all the spread betting information I have read and all the tips that I have been given this is by far and away the most important tip I can give to you. If you stick to the 1% rule or less then you should be on your way to successful spread betting.
I have lost alot of money this way. When I have been bored looking at my trading platform I have traded the FTSE and other indicies and equities purely out of boredom. It’s a hard thing to resist but this, as I found out the hard way, is no different to gambling. If you feel the urge to trade out of boredom with no strategy behind the trade, run away from your computer as fast as you can. Go find a mirror slap yourself in the face and ask yourself “What am I doing”. Turn your computer off. Go outside, sit in the garden, smell the flowers, cut the lawn, make yourself a snack, phone a friend who you haven’t spoken to in a while do ANYTHING ELSE to stop yourself from boredom trading. I’ve been there done that and each time I’ve done it and lost money I ask myself “why did I do that?” Don’t make the same mistake. DON’T BOREDOM TRADE
I have lost money by making rash descisions when it comes to trading. When I first started I looked at a chart and thought its going up so it will continue to go up so I’ll buy. Big mistake. More often than not I was buying at the top and the price started to drop as soon as I clicked the buy button. It’s for this reason that I now never click the buy or sell buttons. I prefer to plan my trades and set them up as orders in my spread betting account. I’m even trying not to click the buy or sell button to take any profit. I want to move up my stop loss orders to keep locking in profit untill the move is over so I caputre as much of it as possible. This way I cut my losses short and let my profits run and run and run.
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This is a tip which I have not followed many times and have paid the price for it. If like me you are trying to learn the ropes of spread betting with a small amount of funds then I would highly recommend you do not trade the FTSE for at least the first year, if not longer. The FTSE can easily move 100+ points in a day. So even trading at the low price of £1 per point this could still mean £100+ move against you in one day. If you are only trading with around £1000 it will only take 10 bad trades like this to wipe your account out and probably put you off spread betting forever. This is not what you want is it.
I try to stick to a rule of only risking 1% of my trading capital on any one trade. This is another tip which I will cover in another post. Again I have not followed this tip which is how I have ended up with a current £500+ loss. If you follow this tip then you can make 100 trades with your £1000. Law of averages says that you should win at least 50% of the time so if you stick to 1% risk then you should always live to trade another day.
I have tried to trade the FTSE with only 1% risk but this is a very difficult thing to do. The FTSE can move 10 points in a matter of seconds so you can be very quickly stopped out of a trade. When I have tried to trade the FTSE I have tried to identify support or resistance lines and place my trade based on these. Identifying support and resistance is a bit of a skill which I have yet to master. Hence the reason for mostly losing money on FTSE trades.
Therefore I have decided that the FTSE can wait until I have more confidence in my ability to trade. I am (for the time being) a position trader. I am buying and holding. As the great Warren Buffet said “Our favourite holding period is forever”. This is going to be me from now on. I am going to buy and hold and move up my stop order as the position moves in my favour.