Spread betting as a financial investment is characterized by market diversity and in fact is one of the factors that have contributed to its growth in the last decade.  With different attributes spread betting has sometimes been classified as a different neighbourhood of financial investment and whilst there are quite a number of differences between this instrument and others, it is quite obvious to state that investors whom are looking to make profits should approach their spread betting account the same way they approach any other investment portfolio.  As an auxiliary measure all aimed at making the best out of the markets in terms of financial spread betting, hedging portfolios reasonably against the risks should be a step worthy of taking. Diversifying positions is a step of importance which should be taken considering that currencies are now topping the list of the most traded instruments in financial spread betting given the volatile nature of currency do hold in every respect.

The FTSE and the Dow remain the most popular spread betting markets with currency pairs being favoured including the Euro-dollar and sterling – dollar. Spread betting experts feel that the best approach which one should consider is utilising your hedge fund and taking advantage of the many opportunities to trade in a variety of markets and by using leverage for financial success. Furthermore, risk management principles should be part of hedging portfolios, after all that is the main objective of hedging. Investors should productively strive to gain experience and sensible exposure to a wide range of markets and instruments that are not necessarily connected.

The rationale behind diversifying into diverse and asymmetrical instruments is that you get the option to hedge against losses. Diversification in this regard means that if disaster strikes a certain portfolio, it at the same time creates an opportunity in the process. Risk management in any financial investment is best left to the investor and as much as there is a very strong encouragement of ambitious trading, there are limits that should be taken in to account and most precise if you are involved in leveraged trading. It is important however that one should take things slowly particularly in spread betting, however, many expert analysts would have you risk no more than 3% of your initial capital. Whilst this 3% may look small, in this regard one can see that it is very manageable and will keep you striving to achieve better.

 

Last Updated: November 24th, 2011