Survival Tips for a Stormy Market

1. Volatiliy is a positive trait for spread betters allowing them to take advantage of larger-than-normal moves in the share prices of big companies. But if the volatility persists it could have a detrimental effect lowering confidence in the markets - unlimited volatility at some point ceases to represent a trading opportunity and starts to represent chaos.
2. Difficult markets do bring excellent buying opportunities for the medium term, although one needs to be selective and patient.
3. It's not a time for panic, although it is a good time to be taking advantage of others' panic resulting from irrational or forced selling..
4. Of course, to take advantage of these opportunities you do need to either retain some cash, have the ability to switch from other assets or make use of unused borrowing capacity (for those few clients who have the tolerance for gearing). And you should not expect the benefits to arrive from such buying immediately.
5. Stop losses and getting arbitrarily stopped out due to spikes, I agree this is frustrating. Way round this problem is to make sure you have enough funds in your account so that you don't have to set stop losses too tight, avoid trading at the start or end of the day as the spreads widen a lot (admittedly difficult when rolling overnight but I have started widening my stops on rollovers), and not having automatic ones but applying them manually (if you are able to keep track of the market, of course...).
6. Make sure to take your profits at some point especially in those volatile markets - traders often neglect this only to find themselves dropping in the red again!

Spread Bet Day Trading Tips and Tricks

1. If you decide to day trade use US stocks rather than UK stocks. Two reasons i.) spreads are tighter (major stocks) and ii.) no stamp duty. Also, you have some guidance from London on day sentiment whether it’s up or down.
2. You can make money on very big movement days if you go with the flow.
3. No 'overnighters'. Accept a loss if necessary but always close on the day. Don't confuse a long term investment with a short term trade.
4. On (3) above the best loss is always the first loss. You can do some ADVFN research on this if you want to, check out the Northern Rock threads when the problems first surfaced and it closed at £4.50 on a Friday night. Someone said that price would look good on the following Monday.
5. Keep your trading pot separate from your main cash/savings/investments and before starting out make sure you are comfortable of losing this trading money with no adverse impact on your day-to-day life.
6. Risk no more than 5% of your trading pot on any one trade. Try to look for trades that offer more than 5% upside. That means if you use spread bets for example you would take say a £10,000 trading pot, punt say £10,000 on a trade providing margin = 5%, i.e. £500. Close the trade if losses = £500 and/or profits = £500+.
7. When markets get turbulent gurus sometimes talk about a three legged stool of profit trend, dividend level and asset cover as a minimum for stronger stocks worth supporting. For you spreadbetters I would say the equivalent might be: go for 3 x the minimum stop loss.