Even though the prospect of trading stocks and shares can seem a little confusing, chiefly because there are countless financial terms to get your head around, the process of spread betting is actually rather straightforward.
This allows you to take a position on whether you think a market will rise or fall without having to buy the underlying asset. Just like any other investment, there is of course an element of risk, but spread betting means you only have to put down a small deposit for a much larger market exposure.
However, if you are a spread betting beginner, you will need to know where profitability and prosperity can be found. With this in mind, here are some tips to help you to very quickly get up to speed.
Take the time to plan and prepare
Seeing as spread betting can be quite a strategic endeavour, you will need to come up with a plan of action. First of all, take the time to conduct some research, read the news, check financial reports, judge market sentiment, and follow economic announcements.
Not only will these factors be of assistance when you actually start spread betting, they may also have a significant impact on tradable assets. But, while they say knowledge is power, do not consider every piece of data to be relevant or influential. Don’t just be swayed by the last thing you read.
Gain an understanding of spread betting signals
In order to be successful at spread betting, you must have an understanding of the market signals, which should provide you with some much needed guidance when attempting to anticipate movements.
This is where things get technical, as you will need to be on the look out for things like Resistance Levels, Stochastic Measures, RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence), and other factors. Read up on all of these and make sure you are market-literate.
Practice makes perfect
Before diving into spread betting head first with a fistful of cash, see whether your research into the subject has worked by practicing your trades. If you open up a demo account at a spread betting company, you can perform a ‘faux trade’ by choosing a currency pair, indices, stock or commodity and then follow its success.
Also known as “Paper Trading,” this strategy means you won’t lose any real money but can get the hang of what spread betting is all about and test the technical knowledge that you’ve learned.
Always justify your trade
Even if you managed to achieve some preliminary prosperity through practicing, this doesn’t mean to say you are guaranteed to make money when spread betting for real. So, whenever you make a trade, write down the reason why you believe it will perform well.
You should also place a stop loss at the right price point to avoiding losing too much, and a take profit point, as greed is a common downfall.
Remember to use limit orders
Limit orders are one of the best tools at a spread better’s disposal, as they enable you to secure profit by closing out a winning trade as soon as the market reaches a specific value.
Do this in anticipation of the day’s trading, otherwise you will be sitting in front of a computer screen for a prolonged period of time just waiting to hit your profit points.
