In this section we review 10 spread betting trading tips from my personal trading experience. Since the 6 May ‘flash crash’ in 2010, the stock markets have been very unstable. Some investors at the time even feared a 1930s-style economic collapse. Others hoped and are still hoping for a huge rally fuelled by large institutions and corporates starting to spend some of the record piles of cash reserves they’re sitting on. Which outcome is more probable? In a nutshell it doesn’t matter to us traders and we can igore all this. Here are are few spread betting rules and trading tips to help you better your trading.
- Have a trade plan. If you don’t have one, develop it – a trade plan is basically a system that tells you when to enter or exit a trade. Trade the plan with discipline. Don’t wait for confirmation other than your system.
- Trade with the trend. Let your profits run and cut your losses – losses are harder to recover than to make a gain.
- Buy on dips near support. Sell on rallies near resistance.
- Don’t chase price; buying when price is extended increases your risks astronomically. If you miss it or are late, let it go. There’s always another trade.
- Don’t force a setup or trade. If you have to make it look good, it probably isn’t. Wait for the perfect setup. You may only get two or three a day, but wait for them.
- Develop a money management system. Do not risk more than 5% of your capital in any one trade.
- De-leverage. The more margin you use, the more your risk. Start out slow with as few contracts as possible. Build your trading account and capital before you increase leverage.
- Use Stop Losses to protect yourself from losing trades – Stop loss orders are useful in that they help to reduce the need to monitor the markets on a continual basis. Set a best/worst profit/loss level for each trade and stick to it. Use a disaster hard stop; and a mental close-by stop. Guaranteed stops also help to protect against gapping.
- Be disciplined.
- And finally take responsibility for your own decisions.