With financial spread betting you bet on margin which means that
you benefit from increased leverage. That is, you pay a small initial
deposit (margin) and that allows you to take a larger position than you
would be able to in say traditional shares trading. Profits can be
substantial but so too can losses, that's why it's important you
understand the financial market you are betting on, proactively manage
your risk and always keep a close watch on your open positions. Risk
management is always at the core of any successful financial spread
betting strategy.
Controlled Risk Stops and Guaranteed Stops
Placing a stop on your bet is very important. For every bet you place simply calculate how much you can afford to lose and place a stop at the exact position in the market where you would exceed that amount. Guaranteed stops do exactly what you would expect them to, so, even if the market is subject to 'slippage' (a sudden, rapid movement) your position will be guaranteed to close out.
Monitor All Positions Closely
Keeping an eye on your open positions is very important too. Financial spread betting is done on margin and that can be an advantage, but remember, if a market quickly moves against you, you might have to increase the amount of your original margin as security. While it's up to you to monitor your margin on all your positions, if you receive notification from your provider that more margin is due, do not ignore them. A recent report by research organisation Investment Trends suggests that the largest spread betting company in the UK is IG Index.
Controlled Risk Stops and Guaranteed Stops
Placing a stop on your bet is very important. For every bet you place simply calculate how much you can afford to lose and place a stop at the exact position in the market where you would exceed that amount. Guaranteed stops do exactly what you would expect them to, so, even if the market is subject to 'slippage' (a sudden, rapid movement) your position will be guaranteed to close out.
Monitor All Positions Closely
Keeping an eye on your open positions is very important too. Financial spread betting is done on margin and that can be an advantage, but remember, if a market quickly moves against you, you might have to increase the amount of your original margin as security. While it's up to you to monitor your margin on all your positions, if you receive notification from your provider that more margin is due, do not ignore them. A recent report by research organisation Investment Trends suggests that the largest spread betting company in the UK is IG Index.
By
Nicholas Dockerty
Submitted On March 24, 2010
Find out more about financial spread betting with IG Index.
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