Spread betting: keep it safe

published 27 April 2011

Most of us think we are above-average drivers. Indeed, most of us think we are above average at most things. Especially if we are men. Although confidence is definitely a plus when it comes to spread betting, too much of it early on can be ruinous. So here are a few ways to keep yourself out of trouble while you learn the ropes.

Get practising

Most brokers will offer a dummy platform on their website. Here you can play around with different bets in a harmless environment. No real money is won or lost. Make the most of this opportunity and also any free online tutorials available.

Keep bet sizes small at the outset

Spread betting is not about identifying the single trade that will make you rich overnight. Regular trading for decent but not spectacular profits, and an acceptance that you will lose as often as you win in the early days, will serve you well.

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Use stop-losses

The principle is simple if a trade backfires you want to be able to exit it without getting hit for six. Guaranteed stops (which get you out at an agreed price) are better than simple stop-losses (which sometimes don't). Trailing stops (which protect past gains but still get you out of trouble) are also useful. Ask your broker about these.