Since the world of financial spread bets can be so risky, it pays to start out as timidly as possible. This page offers some suggestions that will hopefully stop a new trader from losing the house...
1. Have a financial cusion. Everything everywhere about spread betting highlights the potential risks. Why is this? Actually, spread betting is possibly the highest risk activity available in financial markets.
Simply put, there is the potential to win or lose very large amounts of money very quickly.
Therefore, if you plan to move your financial trading upwards (in terms of potential earnings), be sure to have a strong financial cusion available. When thinking about the risks involved, it is often useful to think about the potential impact upon your lifestyle that could be made if a trade goes wrong. Such sobering thoughts will hopefully reign in any wilder trading intentions.
2. Get good at market analysis. A strong background in technical analysis would seem to be very helpful in all forms of trading. The likes of Warren Buffett invest for years or decades, but as a trader or spread bettor, you may invest for hours or days. This different approach needs a different approach...
We would also suggest that spending the time to really become an
expert in a field of technical analysis would be beneficial. This may be
Dow Theory, Elliott Wave, Fibonnaci sequences or something else, but
the better the theoretical understanding, the greater the insights.
Watch These Free Videos And Learn How To Trade Financial Markets
3. Reduce volatility. It would seem to your authors that reducing the risk to trades might be a wise move, especially in the early days. Therefore, using a longer time period ought to help. For that, it is possible to focus on quarterly prices rather than daily.
Should you choose this option, time spent researching moving averages is unlikely to be wasted.
Regular traders will be aware that the movements in market indices from one day and one week to another seem to be quite random and give the appearance of high volatility. However, when the numbers are plotted in to a 90 day moving average, it is often quite surprising how clear a pattern in the market actually is.
There are many theories about the relationships between different moving averages (the most common averages used are 30 day, 60 day and 90 day), and we have neither the space nor the technical expertise to attempt to take you through them all. But for trades and financial spread bets over a longer period of time, these relationships between different moving averages can also be very instructive about future market and price directions.
To read more about financial spread bets, please follow these links:
Spread Betting Financial Markets For Beginners
Who Are The Main Spread Betting Companies?
How To Spread Bet - 7 Important Lessons For A Beginner
3 Great Spread Betting Tips
How Easy Is Spread Betting Shares?
Spread Betting Forex Markets
FTSE Spread Betting Information For Beginners
What Spread Betting Software Should You Use?