Financial Spread Betting

Successful Financial Spread Betting

The psychological factors involved in financial spread betting especially for a beginner are crucial in his first steps. From the entry point when newbies open a demo account and perform a few successful trades they ultimately think that they will open a live account and generate huge profits. As soon as they start spread betting, this time with their personal savings, the emotions involved can truly be overwhelming leading almost always to failure. From this point onward various phases occur in his trading psychology which can either be constructive or detrimental for a trader's career. Understanding these phases in advance can truly make a difference in ones spread betting career.

Once a trader realizes his mistake of having prematurely begun live spread betting and having suffered losses as a result, they may seek advice from other experienced traders. This tends to be another bad decision considering the fact that 'trading styles' vary in traders and spread bettors, so heeding them may not bode well for the trader either. After going through that erratic phase, a spread bet trader learns to devise his own spread betting strategies that suit his own style and expectations from his investment and account which is the first step on the path to recovering from his initial losses.

Trader Remains in Confusion

With untested strategies come unpredictable outcomes. What usually happens with such self-devised methods is that they do not yield consistent performance and their application on spread betting live accounts (https://www.independentinvestor.com/spread-betting/brokers/) sometimes does not bring any real benefit, but sometimes results in losses. Thus we find ourselves at the stage where a great majority of traders abandon financial spread betting entirely on account of failure and lowered morale, perceiving financial markets as a waste of their time, energy and money.

To the Beginning

Those who persist will learn at this point to be more watchful of their funds from this point onward, so they will further refine their tactics and use them on their spread betting demo account to check their performance as well as consistency. Developing a trading plan aimed at consistent performance should be the priority objective when doing this, because financial spread betting in a very haphazard manner will result in nothing but loss. Therefore, the trader comes back a full circle to performing thorough research while learning the ropes of trading.

In conclusion, once a trader becomes aware beforehand of the psychological states he is bound to find himself in whilst still in the beginning of his spread betting path; he will have a better idea of how to deal with these situations with more confidence and a positive outcome.

Spread Betting Tips

Virtually anyone can get lucky sometime or another and make a profit in financial spread betting only a few times because there are moments in which the markets move up or down and by following trends and entering in the right moment one could easily generate profits. Despite this, every spread bettor should keep strictly to his own strategy in order to achieve better results in the long term trading abiding always to his predetermined risk appetite.

Please find below the main points which allow traders to stick better to their spread betting strategies (https://www.independentinvestor.com/spread-betting/strategies/) and achieve the right trading attitude.

Profit and Loss Possibilities

When you open a spread bet position keep in mind the likely cost-benefit ratio. You should be sure that it is more likely to gain than lose in a specific transaction, so that after losses are deducted a positive number remains which is your profit.

In other words, you should not open a position, if you do not have any reasons for doing so like an indication from economic or technical analysis. In addition, your earning potential should always be greater than the loss potential, preferably in a ratio of 1:2.

In practice, this means that if you open a position, you should assume that you will earn 20 pips and if something goes wrong, you will lose only 10 pips. Spread betting platforms determine such limits by using the stop-loss (closing a position after a certain loss) and take-profit (closing a position at a predetermined profit).

Keep Your Emotions in Check

One of the most important and difficult aspects from all sides of spread bet trading is the ability to control your emotions. This means the ability to wait for a really good time to open position, wherein the risk return is really high.

Traders should approach the market without emotion, both during winning and losing transactions. After losing a trade one should not allow their ego to persist by trying desperately to win back the lost trades. After reaching a certain profit, you should also remain calm and continue to stick to your strategy. Please note that the market did not change due to your transaction in any way, so neither should your spread strategy change.

Spread Betting Can Also Mean Losses

If you decide to spread bet on financial market, you should definitely think about great profits. But the fact is that every single spread bettor goes through bad periods of losing trades that have no logical explanation whatsoever. Such a phenomenon, without proper money management can lead to discouragement and in some cases zero deposit. This is especially true for spread betting beginners.

Experienced traders are well aware that repeated consecutive losses, are an integral part of any strategy in spread betting. Of course, it is also crucial to management well your funds, have good risk management skills and be extremely resilient to stress.