How To Be Successful at Spread Betting
Learning how to succeed at spread betting is a process that can deliver significant rewards over time, particularly as you begin to build both your confidence and your capital. For those that make the grade, massive pay-days await, along with the roller-coaster ride of ups and downs that comes with the territory of being a serious trader.
Unfortunately, the vast majority of traders will never find themselves in a position to benefit from these rewards, and in fact will probably lose money overall in their pursuit of spread betting nirvana. In order to make sure you don't join the ever-expanding graveyard of failed spread bettors, we've compiled several of the most crucial things you can do to shape your trading future, with a view to becoming a more accomplished and ultimately more successful spread trader.
Choose a Solid Broker
Step one - get yourself a good spread betting company with tight spreads. If you want to become a successful trader, you need as much time (and as much capital) as possible to focus on honing your trading skills. One thing you do not want to encounter is difficulties with your broker, or indeed choosing a broker that's simply not value for money. Brokers essentially provide a very generic service - the only tangible things that differ are pricing and platform. It is recommended that before you settle on any one broker, you try your luck with a few different demo accounts before settling on the one that appears to offer the slimmest spreads, the most intuitive interface and the best odds. While it's not always easy to choose between different spread betting companies, the wrong choice can cost you significant sums of money over your trading career, so it pays to choose wisely and to periodically check you're still getting the best deal.
Know Your Onions
This point really can't be stressed enough. If you want to become a successful spread bettor, you have to know both spread betting (as a format) and the markets you trade inside out and back to front. It is essential to know what you're talking about, and that goes beyond reading a few short news articles and tuning into Bloomberg every once in a while.
Aim to understand how the markets work, what factors impact on pricing, how volatile markets tend to be, how markets have swung directionally in the past - like any professional, you can only be good at trading when you know exactly what you're doing, to the point where you can shed reasoned, intellectual insight into the way the markets behave. Trading is a ruthless, dog-eat-dog environment, and only true experts can positions themselves ahead of the field to profit on a consistent basis.
Discipline is a crucial skill to master as a successful trader. Discipline means ensuring not only that you are absolutely 100% behind a position before you enter it, but also ensuring you enter and exit at the appropriate times. Many a trader has been caught off guard by a lazy or half-hearted trade - flying by the seat of your pants makes for very risky trading, particularly with spread betting, so it's not an advisable strategy to relent and enter a position simply for the sake of doing so.
Likewise, it's so common for traders to cut off a winning streak prematurely after being carried away by the rising stock ticker. Make sure you are absolutely certain you've extracted the most value you can from you trade - have the discipline to ride the curve and take your profits when you feel the market is starting to reverse on itself.
Know When To Cut Your Losses
In a similar vein, one of the hardest and consistently soul destroying things to do as a spread bettor is to reject positions that are losing you money. Even the most logical, most rational positions can lose, and there's absolutely nothing to be gained in watching the value of your account slide in the vain hope that the market will ultimately wake up and see your point of view.
No matter how much time you've spent thinking your position through, no matter how much energy you've invested in reaching your trading decision, there comes a time when it makes more sense to cut your losses and move on - a skill that most if not all serious, major spread bettors will have mastered. You can either adopt this approach from the outset or learn the hard way - either/or, you don't become a great trader without appreciating that you can't win them all.
Road to Success
Becoming successful at spread betting is, like most things, a difficult process that pays due dividends for those that put in the hard work and effort to get themselves to that stage. While there is sadly no direct route to riches through spread betting, by taking control of your trading career, avoiding the most common pitfalls that trip-up even experience spread bettors and making sure you treat your trading in a serious, professional manner, you should find yourself in the best possible position to derive a good source of income from spread betting over time.