Trade Markets You Understand

When it comes to trading of any variety, knowledge is more than just power - it is the lifeblood of trading decisions, and an essential piece of the successful trading puzzle. When you think about your first trade, chances are you'll be hopelessly lost and totally unable to associate with a particular market, asset or index as financial spread betting offers a wide range of markets to choose from.

From there, however, you need to devote time and energy towards learning a particular market, both in terms of technical analysis and real-life research. For some, that could be researching a particular commodity or group of commodities, while others might end up turning their attention to a large market index like the FTSE100. But whichever market becomes the basis for your research, it's important that you both hone and target your research efforts to a few core markets, so you can become an expert in your niche market area.

Don't Spread Yourself Thin

One of the dangers of researching a variety of different markets en masse is that you spread yourself too thin. Scraping the surface of a number of markets is no use if you don't have the time to delve a bit deeper - quality and depth of research will always trump the spread of your research, by allowing you a better insight into how the relevant underlying asset or index might respond. By devoting your research efforts to just one or two markets, you can really drill down to the core issues driving those markets in either direction, which positions you to make more informed (and hopefully more successful) trading decisions.

Become the Expert

In spread betting, as with most other forms of trading, expert knowledge is the key to the most lucrative opportunities. The world's most successful traders certainly didn't get to where they are today by chance - the risks they take are calculated, and the trading decisions based on sound logic derived from hard work and research.

If you want to be a successful spread bettor, you need to follow in their footsteps and become an expert in the markets you trade. Similarly, you should only then trade markets in which you are an expert, to avoid spreading your investment base too thinly and to prevent half-baked decisions on pseudo-logic and first-glance research.

By dedicating your labours to a handful of markets at any one time, you can become more closely aligned with the market dynamic and become more familiar with how it responds to given external factors, which in both the short and long run will enable you to more readily identify profitable opportunities.

Trading within the realms of your understanding and understanding the markets in which you trade is a two-way street. It is an essential state of affairs for traders that don't want to lose their investment capital, and you can get the ball rolling by picking markets and looking firstly at technical data. When you've picked your markets, spend some time watching how they respond, and noting down the causes of any large swings - this research phase will prove invaluable when it comes to trading those markets with high leverage.