A Traders Guide to Spread Betting – Placing Your First Trade

Speculating on the market’s price and movements within it is called Spread betting . All major financial markets can be traded upon using Finspreads. These markets may include commodities, bonds, world currencies, global equities and the chief American and European indices.

Buying and Selling

Sharing similarities with traditional trading, you are shown both the buy and sell prices with spread betting.

‘Going Long’- When you expect the price of the market to rise and buy at the offered price.

‘Going short’- When you expect the underlying price of the market to fall and sell.

You will profit for every point the market moves in your favour – e.g.  if you go short and sell and the market falls; your profit will be your stake multiplied by the point movement.

Spread betting differs from traditional trading in that; you need to speculate on the price movements of an instrument, if you own the underlying instrument.

Please keep in mind, if you have decided to ‘go long’, and buy at the offered price and the market falls – your loss will be calculated in the same way: point movement multiplied by stake.

Strategy and Plan for Trading

The low margin feature may also be where we could find the aforementioned risk of loss is. Any loss will be exaggerated so you could end up losing more than your preliminary stake, this makes for a high level of risk.

Despite this, the ideal is still a welcome feature for new traders. As the initial deposit is only a small percentage of the underlying instrument it creates easy access to a wide variety of financial markets.

To help limit these possible losses precautions must be considered prior to placing a trade.

Throughout any volatile market movements a well thought out trading strategy provides sound perimeters which deter you from impulse trading.

Your trading strategy often helps you answer imperative questions when starting out, such as: What markets do I want to focus on? And what kind of trader do I want to be?

Conclusion

Regardless of which direction they move, Spread betting with Finspreads offers both new and experienced traders the possibility to make a profit from an array of markets

It is important to note: a leveraged product, such as spread betting on the financial markets have their consequences such as losses swiftly exceeding an initial outlay.

Remember to take the time to fully acquaint yourself with the risks involved, this is an alternative form of trading and is not appropriate for all traders. Always seek independent consultancy if you are ever unsure about your next step.

Info on Finspreads:

With Finspreads spread betting accounts we are helping more and more individual traders discover the profits of derivatives.

Visit http://www.cityindex.com/ for more information. The City Index Group of companies is one of the world’s most prolific suppliers of derivative trading services for retail investors. Finspreads is proud to be part of it.

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