Spread betting is about taking risky decisions on whether to expect a rise or a fall in the price of a product after placing a trade. Your profit or loss is dependent on whether the market will move in your direction or not. It involves speculation on price movement of global financial products such as indices, currency pairs, shares, treasuries and other commodities.
Spread betting is one of the cheapest ways for private investors to make big gains on their marketing hunch. With the right call, it can make you a lot of money, quickly. For an assured win, here are things you should not do when spread betting.
- Enter the market with preconceived ideas about trading
Successful spread betting requires you to be well conversant with the market that you are placing your bets on. Preconceived ideas are destructive and false. To make the right decisions when spread betting, you must research and master well the aspect of market timing.
Buying and selling too early might have you squeezed out of falls and rises. If you don’t understand the markets, if you fail to methodically prepare for trading, if you fail to adequately rehearse your trading skills, you will perform poorly.
- Work without clearly defined goals and trading plans
A trading plan guides you through to finding the right trades, how much you are going to invest in a given trade, the actions you are going to take during the trading process and on the entry and exit strategies.
The trading plan will guide you to understanding the fundamental mathematics that you are fighting against and the risks on each of your individual trades. Lack of trading strategies only leads to consistent failures and emotional breakdown.
- Keep changing systems
Most traders are bound to start thinking about moving on to something better after a few losses. They fail to understand that with betting, no system will guarantee them 99.99% win. Generally, it’s never the system that dictates the win but the person using the system and their judgment and operations plans.
Successful players have the discipline to stick to one system and seek to work on their decisions and strategies. They take full responsibility for their performance, are accountable and do not put the blame on to the system in case of failures.
- Be controlled by emotions when faced with losses
If you fail to control your emotions when faced with failures, gains, risks and luck, then you are on the edge of failing in spread betting. Uncontrolled emotions lead to irrational decision making and poor judgment, in such situations, you are bound to act irrationally rather than on the right strategies.
Spread betting is 90% about you and only 10% about the markets. To avoid the emotional challenge, try to ignore the bad news and only focus on the good news, act with probabilities and not predictions, research and analyze critically on all possible outcomes from a clear perspective, work with facts and thoroughly investigate before jumping on to the bet.Understand that spread betting is just a solid case of cold mathematical logic.
- Expect too much
For successful betting, successful players do not put themselves into positions where they expect the market to produce consistent and regular results for them. They understand that in ventures like CMC markets spread betting, they must devote their time and energy into the process and on learning how to effectively control their emotions.
- Ignore stop orders
A stop order will minimize your risk of spread betting, they ensure that effectively run your profits and stop the losses before they become too big. Be sure to place the stop orders close enough to the existing market prices so as leave you with the smallest possible loss. Bear in mind, a small loss is the best loss.
It is of utmost importance to keep up to date with the current affairs and happenings because they always affect the existing market prices. To be successful in this venture, set clear goals and winning strategies, use stops when the bets aren’t going your way and do the mathematics to understand how much you are putting at risk all times. Remember that with this venture, you can lose more than your initial investment.