Money management is somewhat different for fixed odds trading than it is with other forms of trading.
With other types of trading, much of the skill is in monitoring open trades, and knowing when to close them. Whilst this is true to a certain extent for fixed odds trading, the onus is on getting it right up front, because you can just let the trade run to expiry, if you choose.
This is one of the great advantages of using fixed odds trading: it encourages you to do your methodical research, and get your money management right before you open the trade.
In the short-term, trading the financial markets using a leveraged product such as spread betting, many professional traders advise that you risk no more than 1% of your trading capital on any one trade. This is because the exposure to potential loss can be far greater than the preliminary stake.
With fixed odds trades you can potentially be more flexible. You know exactly how much you stand to win or lose from the beginning, meaning there won't be any unpleasant shocks. Even if the market collapses, all you lose is your stake.
You could therefore choose to risk a higher percentage of your starting amount, depending on the odds that are offered. If you and BetOnMarkets estimate that an event is highly likely to happen, you are less likely to lose, and may make a strategic decision to risk more. If an event is unlikely by your estimates, but more likely than the odds imply, you are more likely to lose, so you therefore might stake less.
With experience you will learn about your appetite for risk, your ability to handle the emotions and ultimately your ability to trade financial fixed odds. A comprehensive trading plan with scheduled reviews at regular intervals will you appreciate what the risks are.
As part of your trading plan, you should give serious thought to the amount of money you apply to your account: You should never trade with money that you can't afford to lose.
Please Note: Financial fixed-odds can become addictive. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Financial Fixed Odds - Money Management' by DB, updated 04-Nov-10
For related pages also see:
BetOnMarkets, updated 11-May-12
It is always useful to have a financial fixed odds account in addition to your spread betting account. It's worth taking a look at the award winning BetOnMarkets who...read article. BetOnMarkets Offer, updated 11-May-12
Details of the latest BetOnMarkets new account offer. Open a financial fixed-odds account with BetOnMarkets, enter the promotional code of CF-BOM and...read article. BetOnMarkets Financial Markets, updated 11-May-12
BetOnMarkets offer a range of financial fixed odds bets, including the FTSE 100, US and UK Shares, FX see for more details...read article. Financial Fixed Odds Trading, updated 02-Nov-10
Financial fixed odds trading on the financial markets allows you to speculate on a wide variety of markets, with the knowledge of how much you could...read article. New Fixed Odds Equities Markets, updated 29-Apr-09
Whilst there is a wide array of Forex and Indices markets at BetOnMarkets it is good to see they are expanding their range of equities. 5 new...read article. Fixed-Odds Trading plus GBP100 Offer, updated 28-Apr-09
Whilst we normally concentrate on spread betting we have often found that having a financial fixed-odds account can be a useful tool.Naturally the bets are structured in a slightly different way. For example there are...read article. Weekend Financial Trading and the Random Walk, updated 26-Nov-10
Where to trade at the weekends when the markets are closed? One option is the Random Walk Index...read article. Pricing a Financial Fixed Odds Trade, updated 03-Nov-10
A lot of people don't realise that pricing the trade is the most vital part of making a successful fixed odds bet. BetOnMarkets offers you a price based on the...read article. Financial Fixed Odds - Money Management, updated 04-Nov-10
Money management is somewhat different for fixed odds trading than it is with other forms of trading. With other types of trading, much of the skill is in monitoring...read article. Financial Fixed Odds: Key Technical Set-Ups, updated 05-Nov-10
Understanding whether a market is likely to continue a trend, stagnate or reverse is vital for succeeding in financial fixed odds trading. There are many ways of...read article. Financial Fixed Odds: Applying Technical Set-ups, updated 08-Nov-10
Certain trades are better applied in specific situations based on the trend and volatility so you should be aware of big up coming announcements like Interest Rates and...read article.
Q) Average Trading Results?
A) Get free spread betting tips, offers, price updates, important news and more! All Free - Click here!
Risk Warning:
Please note that spread betting and CFD trading carry a high level of risk to your capital. You can lose more than your initial deposit. These products may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.
