| Financial Spread Betting Strategies |
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| Written by Jon Lee |
| Wednesday, 19 May 2010 20:42 |
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I hope that the spread betting strategies that you are using at the moment are working. Are they? If not then perhaps it is because you aren't including correct risk management. A lot of people neglect this but it is perhaps the most important element of spread betting strategies, especially when you are starting out.
I hope that the spread betting strategies that you are using at the moment are working. Are they? If not then perhaps it is because you aren't including correct risk management. A lot of people neglect this but it is perhaps the most important element of spread betting strategies, especially when you are starting out. You will find lots of stories about traders going bankrupt, often trough over exposing themselves. Imaging if you are risking 20% of capital each trade. You only need to lose 5 trades in a row and you have lost it all. You have to think about making it through to the next day. Survival is the most important thing. If you lose half your capital in a short period then you need to get a 100% return to breakeven. The above scenario demonstrates why it is important to consider risk management as part of your overall spread betting strategies. Another important part of risk management is the use of your stop loss. The most successful spread betting strategies have strict rules in relation to stop losses. These stop loss points should only be moved in the direction of a winning trade. If your trade is going against you shouldn't adjust your stop loss to give yourself more leeway. You should accept that the trade went against you and remember that you can always re-enter the trade further down the line. There are a number of traders who, as part of their spread betting strategies, take the rest of the month of once they've reach a set number of losing trades. This can be quite an effect strategy as it gives to chance to analyse your approach and build your confidence. It is a shame that traders often ignore the importance at reducing risk. This is your opportunity to change your spread betting strategies to gain an advantage. Yes you may want it all now but be patient and your goal is to make it through to the next trading day in tact. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Want to find out more about spread betting strategies, then visit Jon Lee's site on how to choose the best spread betting strategies for your needs. |