How to Start Spread Betting

Newcomers to spread betting may be scratching their head about exactly what to do once they've set up an account. Charts, tables and spreadsheets aren't easy for a beginner to navigate, yet they require an understanding before any trader puts their money down. If you've recently opened a spread betting account, but you're not entirely sure where to start, then this article has some advice.

Understand what you're doing
It sounds obvious, but too many people wade into spread betting without fully acknowledging the risk, and sometimes not even understanding the interfaces they are using. It is essential that you understand both these things before you even consider betting real money. You should set up a simulator before you start for real and try that for a month. Even if you're up by a big margin, don't think this success will be replicated when it comes to the real thing. If you want to play on a demo spread betting account, take a look at CMC Markets.

Start Conservatively
You shouldn't place bets on fast moving companies to begin with – you might think you've spotted the next Google, but the chances are you'll be taking bigger risks if you go for volatile stock options. The FTSE 100 or other established indexes can be a good place to start.

Limiting Your Portfolio
In contrast to stock market investing over the long term, spread betting is speculative and difficult to profit on over longer periods. Don't get carried away and start gambling with your pension or your future. Short term gain can often be good to go for as part as a balanced portfolio, but you should never use more than 15% of your capital for this end, and preferably less.

Stopping Losses
When placing a bet make sure you consider the various risk management tools available to you. Using tools such as a stop loss or limit order will benefit you should the market move against you. Risk management tools are wide ranging, and can even work as a kind of insurance – make sure you check them all to see how they fit into your trading plan.

Patience is a Virtue
Any newcomer to stock trading is unlikely to make a profit straight away. It takes experience and technique to become adept in the stock market, and no one can claim to be the master of it – even Warren Buffet! Initially, be strict with yourself and bank any small profit and work out a strategy rather than putting your winnings towards further bets.