Three warm up exercises for new spread betters

published 19 August 2011

Recent shuddering drops in the major stock indices will have given many a long-only stock investor sleepless nights.

However, for spread betters these markets create opportunities galore.

That's because with spread bets you can make money as easily from falling prices as rising ones. And you can make it quicker too.

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Notice how a major index such as the FTSE will happily drop 5% in a day at the moment, and then take its time clawing its way back up. For individual shares such as SocGen, the drops have been even more pronounced.

But before you rush off to open a full trading account with your broker, here are three good ways to limber up so that your first few trades don't put you off for good.

Use free demo platforms

Most brokers will let you play around with a few phantom bets before you go live. That means you can experiment with bet sizes and order styles without risking you own money. Take advantage of this opportunity.

Try mini-bets

At Cityindex you can place bets as low as 25p per point (a point is the minimum movement in the underlying index or share recognised by your broker for settling up trades) for the first month. This won't make you rich but does give you the chance to get used to trading a volatile market without betting the farm.

Use spread betting forums

For example at spreadbettingcentral.co.uk you can pick up all the latest Twitter feeds relating to spread betting plus the latest articles being posted on the web or in the media. The more you read, the better you'll be equipped. Sure, not everything that's posted on blog sites or Twitter is worth reading far from! But either can be a great source of new trading ideas or tips to help keep you out of trouble.

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.