Spread betting is all about plan and planning. Before placing any trade, a successful spread bettor must have a tactic in his mind. He must then set out his plan for when to go into the market, how much to stake, which security to speculate on, when to quit the market, and how to escape in case something goes actually wrong. Every detail should be planned previously to try and avoid negative surprises. Spread betting is a game of patience and zeal.
If you actually have a spread betting account and a strategy to place a bet, you need to plan how to exit the market in an efficient way. This will dictate how much you may win and lose on any trade.
Eventuality Planning
Let's start by pondering what can happen to our bet. It can move our way, against us, or nowhere at all. It is also possible that what caused our bet is no longer in place. There are 4 possible eventualities. Let's look into every one.
The bet moves against us:
Before putting the bet we should choose a trigger point for a stop loss order. We can find this level using technical analysis or else using some share of the security price. But what's important is that we stick to that point from the very beginning and never change it. Moving the stop loss further away from this point is bad practice and sadly particularly common among losers. A good spread bettor wants to get rid of losing positions extremely fast. Bad spread bettors end up chasing their losses with often disastrous implications.
The bet moves in our favour:
That's the best eventuality and what makes us make a wager in the 1st place. We wish to grab a good profit, and as large as possible. However if we use the same reasoning we use to cut losses, we need to cut profits too , using another stop order "an order to sell our bet when a particular level is reached. By one side it appears a sound procedure because we decide previously the correct way to exit a trade, avoiding the temptation of moving an exit order indefinitely until we transform profits into losses. By other side, we are going to feel some acrimony when selling a position too soon and throw out through the window part of the upside. We want to get rid of losing positions as fast as possible and keep winning ones so long as practicable. One good answer to this is by using a trailing stop loss, that is a stop loss that will move closer to current costs as the bet goes to our advantage. There are several methods to trail current costs with a stop order: keep it a particular number of points or % cry the present price, keep it in a way that a certain percentage of the profit achieved to date is saved, or maybe keep the biggest difference between the stop and current prices as a share of our capital. The idea is to get the most of the upside potential, and each trader should decide on the precise method to use since there is not any one better than the other. Please be aware that the stop trails the current price when it moves in our favour. But , it isn't moved back, when the current price moves against us. In that case we just let the stop be caught and take our profit.
The trade goes nowhere:
We must choose a reasonable time interval for our bet to perform. If it is going nowhere after that, we should think about closing it and put our cash in more profitable trades. Time = money.
The cause of the bet no longer exists:
Some system led us to place a bet on a security. We could be using some technical indicators, for example. At some particular point, those technical indicators may change such that the reason to keep the bet running no longer exists. In which case we should rethink and fashion an exit plan. We can either exit the market straight away or wait for a better price.
Conclusion
Winning spread gamblers are really patient and well organized. They mostly get rid of any losing position shortly, don't keep moving stop losses farther away desperately expecting the bet to turn their way, don't try to win on every position, and ride a winner the longer they can instead of closing it at the first sign of profit. Keep this under consideration if need to be successful at financial spread betting.
If you actually have a spread betting account and a strategy to place a bet, you need to plan how to exit the market in an efficient way. This will dictate how much you may win and lose on any trade.
Eventuality Planning
Let's start by pondering what can happen to our bet. It can move our way, against us, or nowhere at all. It is also possible that what caused our bet is no longer in place. There are 4 possible eventualities. Let's look into every one.
The bet moves against us:
Before putting the bet we should choose a trigger point for a stop loss order. We can find this level using technical analysis or else using some share of the security price. But what's important is that we stick to that point from the very beginning and never change it. Moving the stop loss further away from this point is bad practice and sadly particularly common among losers. A good spread bettor wants to get rid of losing positions extremely fast. Bad spread bettors end up chasing their losses with often disastrous implications.
The bet moves in our favour:
That's the best eventuality and what makes us make a wager in the 1st place. We wish to grab a good profit, and as large as possible. However if we use the same reasoning we use to cut losses, we need to cut profits too , using another stop order "an order to sell our bet when a particular level is reached. By one side it appears a sound procedure because we decide previously the correct way to exit a trade, avoiding the temptation of moving an exit order indefinitely until we transform profits into losses. By other side, we are going to feel some acrimony when selling a position too soon and throw out through the window part of the upside. We want to get rid of losing positions as fast as possible and keep winning ones so long as practicable. One good answer to this is by using a trailing stop loss, that is a stop loss that will move closer to current costs as the bet goes to our advantage. There are several methods to trail current costs with a stop order: keep it a particular number of points or % cry the present price, keep it in a way that a certain percentage of the profit achieved to date is saved, or maybe keep the biggest difference between the stop and current prices as a share of our capital. The idea is to get the most of the upside potential, and each trader should decide on the precise method to use since there is not any one better than the other. Please be aware that the stop trails the current price when it moves in our favour. But , it isn't moved back, when the current price moves against us. In that case we just let the stop be caught and take our profit.
The trade goes nowhere:
We must choose a reasonable time interval for our bet to perform. If it is going nowhere after that, we should think about closing it and put our cash in more profitable trades. Time = money.
The cause of the bet no longer exists:
Some system led us to place a bet on a security. We could be using some technical indicators, for example. At some particular point, those technical indicators may change such that the reason to keep the bet running no longer exists. In which case we should rethink and fashion an exit plan. We can either exit the market straight away or wait for a better price.
Conclusion
Winning spread gamblers are really patient and well organized. They mostly get rid of any losing position shortly, don't keep moving stop losses farther away desperately expecting the bet to turn their way, don't try to win on every position, and ride a winner the longer they can instead of closing it at the first sign of profit. Keep this under consideration if need to be successful at financial spread betting.
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