For many new traders, spread betting offers an affordable gateway into the world of stocks, indices, commodities and currencies. Technical terms aside (and they really aren’t that hard to get your head round after some basic training or research), spread betting can be a fantastic way for mums to earn money from home – and it’s tax free, too!
Foreign exchange (often known as Forex, or simply FX) is one of the most popular traded financial products, providing attractive opportunities for savvy traders, even in volatile market conditions.
Before jumping into a trade it is important to know how to use technical and fundamental tools so that you can trade more effectively.
Some traders may rely solely on technical analysis, some may prefer a more fundamental approach, while others will use a combination of both. You will need to learn the best approach for yourself in order to gain a more comprehensive overview of each currency pair and prepare for potential movements in the market based on trends and/or the news.
Spread betting plan
Having researched their chosen currency pairs and the market, many traders take time to construct a carefully considered plan with parameters for profit goals, maximum risk allowance, trading strategies and evaluation criteria.
Trading purely on impulses can be dangerous and difficult. This is why a solid spread betting plan and strategy will not only help you to manage your trades better, but will also help to prevent indecision in the heat of the moment.
Discipline
It’s easy to trade on a whim without doing proper research – this is a very risky way to trade, and you could end up wiping your entire account out if you don’t create a plan and stick to it.
Discipline plays a major role in your trading – accepting that not every trade you make will be successful helps to take the pressure off and keep motivated. In a trade that is losing, it is easy to let losses accumulate in the hope that prices will turn around.
Avoid such mistakes by creating your own set of strict guidelines within your spread betting plan and keeping to them.
Follow the news
Forex trades will move in tandem with the live market and are likely to be influenced by global, social and economic events, so if you hate political and financial news, learn to love it – it could make you more money!
Summary
As a new trader, you should research, plan, manage your risk and follow the news before you start trading. Forex spread betting offers an alternative to traditional Forex trading, you can learn more with City Index at: http://www.cityindex.co.uk/range-of-markets/Currencies-Spread-Betting.
Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
