How To Lose At Spread Betting
The risks of spread betting are well known, and their impact on even the most astute traders can be devastating. With highly leveraged trading in whatever guise, the threat of wayward positions running away with your hard earned investment capital is ever-present, and for traders of all experience levels the first priority is to minimise their exposure to risk and to reduce the number and impact of losing transactions in order to preserve their takings from profitable positions. Here we've compiled a few betting behaviours that practically guarantee losing over time, so you can avoid these all too common dangers to get the most from your spread betting positions.
Don't Do Your Homework and Research
Not doing your homework is the first, most sure-fire way to getting flamed as a spread bettor. Doing no or very little research into a market before diving in is trading suicide, and particularly with spread betting where losses can be so severe, this is the fastest way to destroy your resolve and melt your trading capital. It's important to remember that every serious trader knows what they're talking about, and even newbies with the right attitude devote their time and attention to drawing up details forecasts of performance on the basis of cold, hard information. Executing trades is easy - the difficulty comes in getting to know how the markets should and are likely to react, so you can capitalise on anomalies and avoid slipping in to guess-work territory.
Make Reckless Spread Bets
Making losing trades in spread betting is acceptable, and it's par for the course when you spend any length of time pondering the spread betting markets. Everyone loses - from massive investment funds to highly skilled investors and everything in between. What's not acceptable is making reckless or uninformed trades, and that's a quick and effective way to drain your resources and land yourself and your spread betting portfolio in serious difficulties. Researching the markets is one thing, but making sensible trades on the back of your interpretation of that research is quite another, and only by fully contemplating the implications of your findings can you expect to be in a position where your trades are sensible and consistent. You'll still lose from time to time, but by trading with proper care and attention you can increase the frequency of positives and minimise the impact of the negatives - a crucial recipe for success in spread betting.
Hold Out Losing Positions
It's often hard to reconcile yourself to a losing position. When we spend hours charting a markets progress and reading up on the factors and issues that are likely to play into pricing, it can often be a difficult thing psychologically to abandon all that hard work at a loss when things aren't going your way - particularly when you've already lost money on a position. Holding out losing positions is a sure-fire way to run down your trading capital, and more often than not it will be the wrong decision. Traders who are capable of being dynamic and cutting out positions that are sapping their resources are those who will ultimately become more successful over time.
Try To Move The Markets
Finally, don't try to move against the markets unless there's a particularly good reason for doing so. Remember that the markets, while often behaving in an irrational fashion, are actually guided by the trading decisions of serious investors who have put serious effort into establishing their positions. Betting with the grain rather than against it, in accordance with the parameters laid down in your trading strategy is a far more effective way to guarantee more frequently profitable transactions than trying to shape the markets on a one-man crusade.