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As the markets seem to have calmed down for two minutes? lets get back to a few more tips.

Tip 86.  I’m winning, what should I do?

This will happen to many spread bettors. If you break spread betting down to betting high / low or tossing a coin then if you trade enough you should hit a winning sequence through luck. Although you may hit a few bad patches along the way.

Clearly we advise lots of research and never actually tossing a coin. However if you do trade for long enough you can end up on-a-roll. This has certainly happened to me a number of times.

Whilst my research has been sound I have had sequences where I have simply benefited from other factors affecting the market. Other times some decisions have just been too obvious and easy eg buying Financials and the FTSE 100 immediately after the short selling ban for a quick profit.

However you hit your winning sequence try to ignore your ego and remember how you got there. After a bit of luck, you will often be tempted to:

1. Increase your stake size
2. Trade more frequently
3. Trade markets you are less familiar with

I do love “I increased my stake size because overall I knew I would still be up”.

In short, watch out when trading after good profits and stick to your strategy.

If you are altering your trading strategy eg increasing stakes sizes due to grounded and well founded opinion, fine. However, do not forget that trading larger stakes can also alter your trading, eg with larger stakes you might not be able to keep that cool head that got you your profits in the first place.

Do not forget you will also need some of the profits to cover your losses on those days when the whole market is clearly conspiring against you.

Keep your money…do not try to give it back as fast as you can.

Good Luck!

DB

There is a new feature on investing out today, looking for a safe bet with respectable yields? There is one option:

“Yesterday I was asked what people should be investing in at the moment. I had to say in all honesty that how can anyone possibly make a long term investment choice on any stock in the current environment? For very long term players with huge income streams I suppose as long as…” read full article >> Where to Invest.

Good Luck!

DB

There’s a new metals trading report out:

Gold may be at its lowest point for 2008 and other metals may be on the way down too but what were the five key influences on their meteoric price rise?

Over the past five years the price of precious metals has more than doubled. The surge has been attributed to a combination of the following…read full article >> Precious Metals Spread Trading Trends.

Good Luck!

DB

Clearly a very large topic. So for now we are just looking at this from the point of view of the less experienced spread trader.

Tip 79. Those new to spread betting can often benefit from avoiding Day Trading or, at most, trading with minimal stakes. One big problem is that the short period of time available is likely to make you more emotional and cloud your judgment. Many retail investors don’t react well to this sort of pressure and make irrational decisions they would not normally make.

80. Day Trading often goes hand-in-hand with greed. Ask yourself, ‘why am I Day Trading?’ Are you so impatient that you need to open and close a position on the same day? If so, financial spread betting may not be right for you. There’s certainly nothing wrong with opening a position in the morning and aiming to close out in the afternoon for a profit. But doing this day-in day-out can leave you open to all sorts of problems. If you want to make a large number bets within a short period of time it is unlikely that you will have carried out sufficient research.

81. Day Trading is also very difficult if you have a fulltime job that is not looking at the markets all day. If you are unable to keep an eye on the prices then no doubt your normal job will suffer and again…you could be making poor, rushed trading decisions.

82 If Day Trading is for you then be very careful with wide spreads and/or markets will little volatility. You can easily lose out to the spread itself. Eg the spread on a smaller AIM stock could be 20 to 23p ie a spread of around 15%. That market will have to move a lot before you make any money. Assuming it has a normal variation of 5% on a given day then the shares will probably close around 21 to 22p. If you bought at 23p you are likely to make a 1 or 2 point loss even the shares move in the right direction.

Are there any positives? Yes

83. If you do decide to trade over short periods of time then you may be better off spread betting than share trading. With equities you have to pay Stamp Duty which isn’t applicable to spread bets. With Stamp Duty currently at 0.5% in the UK that soon adds up over a large number of trades.

84. Although the width of the spread can be a problem, with the markets as they are at the moment, ie where you have the FTSE 100, Crude Oil, Gold etc all moving around rapidly the width of the spread is less of an issue. It should only play a small part in your trading decision. If the width of the spread for Crude Oil is 5¢ and crude is regularly trading 300-400¢ ranges (or more) on a given day…the spread is less significant.

85. Competition. These days there are a good number of spread betting companies offering good quality services. That has led to narrower spreads, particularly on the daily spot and daily rolling markets. For example, most of the companies featured on this site offer a 1 or 2 point spread on their daily FTSE 100 markets.

It’s not all bad news

Next time a few thoughts on managing your cash…so it doesn’t just disappear.

Good Luck!

DB

As promised, a few tips on Greed (and I’ll do my best to avoid any greed is good jokes).

Tip 75. Do not over trade your stake size. Remember to only trade with money you can afford to lose. That means trade with money which, if you lose it, will annoy you but not money that will ruin Christmas or make your ’significant other’ up sticks and run off etc
76. Do not over trade by placing too many trades at the same time or having too many open positions. A large number of Open Bets are difficult to research. It is also difficult to keep track of a large number of bets and therefore that makes is difficult to make an informed decision on if / when to close your positions

77. If you have a day job then compare that income to your trading income. Do not spend a disproportionate amount of time on trading and let it distract you or even ruin your primary income source

78. Be wary of your willingness to accept any profit so that you can say ‘yes, another successful trade’. You had a plan at the start of the spread bet for when you would get out of your position, stick to it. Try not to let fear overcome you. Of course, if there is new market information then you need to consider your exit strategy. Again note any changes to your plan on your trading spreadsheet. If you find you are closing out long-term bets for 5% profits you are better off leaving your cash risk-free and stress-free in the bank

In the next set of spread betting tips we will be focusing on Day Trading.

Good Luck!

DB