There is no doubt that amongst the many forex and commodity marketing is becoming money spinners for thousands of traders, both big and small. However, on the other side of the spectrum there are many who have not been able to make big money in spread betting and this certainly casts aspersions whether it is actually a money making option or it is more about gambling and depending on Lady Luck. Let us try and find the factual position over the next few lines.
This will help us to understand spread betting better and look at it from the right perspective. It will also help us to learn about some basic and time tested skills which will help us to be on the winning side more frequently than being on the losing side.
Trade With Small Positions As A Beginner
Many traders end up on the losing side because they do not know how to start the trading in the right direction. The best way forward would be to be cautious. For the first few months it would be always advisable to keep the trading size as small as possible. Doing so will ensure that you gain confidence and you will certainly stay ahead of other new traders. Diving deep and looking for big sized fish is fine but doing so as a beginner should be avoided at all costs.
Vary Trading Size Intelligently
It would not be advisable to trade with the same size on a continuous basis. You must try and vary the trading size per each trading session. However, this should not be done arbitrarily and one must know how to learn to scale upwards stage by stage. If you find that you are entering a high risk zone, you must bet only with a low amount. On the other hand if the risk is low, it would be prudent to increase the trading amount and this would certainly give you better spreads.
Have A Clear Idea About Costs
If you wish to be successful as a spread better, you must know how to keep a tab on cost and keep it as low as possible. It is akin to running a business with an eye on the bottom line. You have to specially keep a tab on commissions and the bid or offer spread. While commissions may not be a big botheration, you will have to be careful with the bid versus spread. It could well and truly dent your profitability and the worst part is that it is stealthy and you might know about it only when the damage has been done. The best way forward would be to get as much knowledge and information as possible. Being in touch with websites and information sources like CMC markets can certainly help in more ways than one.
Making Profit Or Loss And Winning And Losing Are Different
It would be wrong to presume that a better who wins more number of times is the one who makes more profit. Spread betting does not work that way. One has to look at it from the total perspective and not on the number of wins and losses. This will help you to focus on the final earning which you are taking home rather than being satisfied with more number of wins when compared to losses.
Understand The Importance Of Stop Losses
You must know how to master the use of stop losses. Though stop losses could be frustrating, it would be better to get out of the scene rather than getting badly bruised and hurt. If you do not know how, when and where to use stop losses, you could even end up losing 20 to 30% of your position in a single trading which could be very bad to say the least.
Rome Wasn’t Built In A Day
Being patient and persevering makes a lot of difference to the end results as far as your spread betting. There are some successful spread-betters who say that they made money just sitting and watching. What they actually meant is that they were patient enough to see events unfold and their decisions were based on logic and facts rather than being driven by gut feeling and sentiments.
Hence at the end of the day there are a number of skills to be developed for being successful as a spread betting professional.