When just getting started in the world of financial spread betting, you will likely be in need of some guidance to help you to avoid making mistakes. While there is no one size fits all guide for this particular investment vehicle, there are some important things that you should make sure you know. This basic guide assumes that you already know how spread betting works, and will jump right into how to find and make smart wagers.
Choosing Your Bets
The most important thing you need to do is learn how to properly choose your bets. If you can manage to find an effective strategy that works the majority of the time, you will be able to make a significant amount of money while at the same time cutting the risks. To find the right asset to bet on, you will want to look at a number of different factors, including the following:
- History – While past history is not always an indication of future performance, it can be a helpful guide. Look at the history of the asset to try to spot trends.
- Internal Events – Look at what is going on within the company (when betting on a stock) or the country (when betting on a currency) to see what types of things may impact the price. You can often identify triggers that may cause a stock or other asset to fluctuate more than normal, and you can capitalize on this movement.
- External Events – Watching for things like elections, natural disasters and wars is very important for financial spread betting. These major events will always impact the prices of stocks, currencies and commodities.
Look for other factors that can be used to more accurately predict how an asset will perform as well. The more things that you can consider when choosing which assets to bet on, the more accurate predictions you will be able to make.
Knowing When to Make the Bet
The next most important thing you need to do is know when to make a bet. Even if you have spotted an asset that looks like it is poised to make a significant move, you will want to do what you can to make sure you place the bet when the price is as low (if betting long) or high (if betting short) as possible. The trick here is to do all you can to maximize profits, without waiting too long and missing out on the opportunity.
One way you can improve in this area is to set a specific price point in your head, and only place the bet if or when it hits that number. This will help to ensure you aren’t getting caught up in the moment, which often leads to unwise decisions.
Knowing when to Close the Bet
The final step that you need to make sure you do properly is closing the bet. Many people make the mistake of going into the situation without knowing exactly when this will happen. When they wait to make this decision until the bet is placed, they often get caught up in the emotion of the experience. Most people in this situation end up waiting too long to close the bet, which either causes them to lose more money than they otherwise would have, or to miss out on important gains.
After you decide which asset to bet on, you will want to decide how many points you can let it go down before closing and how many it can go up. Whether you are betting long or short, you should always decide when you will close it out ahead of time.
Practice Makes Perfect
These tips will help you to improve the way you handle all your financial spread bets, but the best way to improve over time is just through practice. Start out by making small bets, and move up over time as you learn more about this exciting type of investing.