Spread Betting Beginner's Guide

Q: Can you help a complete novice find the way to begin a new spread betting career...?

This might sound corny, or even naive, but can you help a complete novice find the way to begin a new spread betting career...Simon

A: Spreadbetting itself is quite easy, but making money isn't, and from that point of view you need to understand trading in general...

Do you know anything about trading at all? If not, browse Amazon and look for beginners trading books. Key advanced books to invest in are Douglas 'disciplined trader' for the psychology of trading; John Murphy for technical analysis; for currency trading there's for instance Raghee Horner and Kathy Lien's books.

Read the book - Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder. A damn good read about correcting your thinking and size of each trade... If you would like a grounding on technical analysis read a book like - Technical Analysis of the Financial Markets : A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance S.) (Hardcover) by John Murphy.

Don't bother wasting your money on 'Guru' books written by so called experts who have made it big and are selling you the 'secret' to getting rich. Those books are crap and not worth the paper they are printed on. Nobody sells a secret trading methodology or goes on the trade show circuit giving seminars at £100- £2000 a head if they are really successful. The only reason these guys are writing books is because they didn't make it as traders. And don't buy expensive system packages as you will not know how to make them work, and anyway they never work as expected.

Regarding trading platforms Simon, don't bother spending money on big expensive programs and data provision services. These do not make you any better a trader and all the software you need is out there for free. Regarding technical indicators don't search for the 'holy grail' - it's not out there unless you manage to build it yourself.

To start with keep charting simple, and use the free and cheap packages that spread betting companies typically offer to get you started - Ayondo offers a decent demo account; so use this as a sandpit for your strategies until you find a system that works for you. Only consider the expensive stuff once you have realized what you are doing - but, by then you will realize that it's best to keep it simple and you will probably figure out that don't need expensive systems and tools.

Most people who attempt a trading career fail and it's not because of what you think. Trading is not really rocket science but it does involve some severe noose. Develop in yourself discipline, log a diary of all your trades, mistakes, when you do something right, anything less and you will fail. Begin trading for a long period on a demo account before risking your money but treat this as though it were real capital.

Oh, most important of all - read some stuff on money management and risk management. Succeeding at this game is not about being clever with setups, but is mostly about setting correct stops, managing the trade in motion (or setting definite targets), getting your exits right (i.e., you have no money until you close the trade). You need to plan your trades and be disciplined enough to manage according to your plans and once you have mastered that you will need to learn when to change the plan...

Remember, trading is like any other profession, insofar as the accumulation of knowledge is concerned, but this is where the similarities stop. Don't expect miracles. Trading is a rite of passage and is not an easy way to quick riches - the road will be long and the terrain tough, you will suffer pain. Trading is not glamorous! Be prepared to spend a year reading, learning and practicing; then open an account and be prepared to lose everything you put in.

If starting out, make sure to stick to the basics and bet using small amounts, on a market you are familiar with and using basic bets, like a simple buy or sell. Once you have gained some experience in spread betting, the spreads will start to make more sense and you can begin to diversify your action and utilise the advanced order and charting functionalities.

Q: Ok, say I have £10,000 of risk capital I want to start trading with?

A: If you want to learn how to trade, then I would recommend reading the 'Market Wizards' book series by Jack D. Schwager. You do not have to start with huge amounts of money to make it worthwhile... You can continue working while perfecting your trading skills. If you follow the rules and the strategies as taught and keep your emotions in check, then there is no reason why you cannot be successful. Just don't expect instant riches overnight.

Here's a system you could use if you are just starting out and have £10,000 of available risk capital -:

Ok, supposing you have £10,000 of risk capital you want to trade with. I usually recommend only starting with £1000 after a few months of successful demo spread trading. If you are successful after your first month of trading real money, then add another £1000 to your account. If your second month is successful, then add another £1000 for the following month. This way you are proving to yourself that you are indeed a capable trader before risking all of your hard earned money.

If by chance you end up losing all your money in a given month, then you are done trading for the month. Do not add any more funds to your account until the following month and then retrace your steps and learn from it. As I said you do not need a huge amount of money to make it worthwhile; especially when you are using spread betting where the trading fees are low for small deals.

The main thing is to be patient and not get greedy. Greed and the rush for riches is rookie thinking.

 ...Continues here - Is Spread Betting OK for a Complete Novice?

Recommend this on Google

The content of this site is copyright 2016 Financial Spread Betting Ltd. Please contact us if you wish to reproduce any of it.