Spread betting

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16. Strategy - bet only what you can afford

Experienced traders know that it is impossible to win every time. Losing bets are inevitable, and the ability to take losses, psychologically and financially, is an essential factor in sustained success.

Note the word "sustained". Everyone can have a lucky run. It's probably the worst thing that can happen to a new trader. The real measure of success is 'being lucky' month in, month out, for years.

Start your spread betting on the assumption that things might not go your way. Make sure that if every bet you place goes wrong, you have some capital left. That requirement will vary according to:

• the markets you are trading
• the size of bets you place
• the frequency of your trades

As a beginner, you should trade markets you are familiar with, you should place low stakes, and you should start slowly. You can move up a gear when you've got more experience, but if you start off in top gear, you're asking for trouble.

A good way to get experience without risking too much is to use a trading simulation game, like the one developed by www.tradeplay.com. These games allow you to place bets exactly as you would in real life, using real spread data, but they don't involve real money.

Simulation games, even if only used for a month or two, are an excellent way to hone your skills, identify your weaknesses and strengths, and develop a strategy.

1. What is spread betting? 2. A brief history 3. Spreads on individual equities 4. Spreads on an index 5. Performance spreads 6. Other financial spreads 7. Practical advantages - leverage 8. Practical advantages - going short 9. Practical advantages - hedging 10. Practical advantages - volatile markets 11. Practical advantages - tax 12. Dynamics - think short term 13. Dynamics - the size of the spread 14. Dynamics - upside and downside 15. Dynamics - length of bet 16. Strategy - bet only what you can afford 17. Strategy - cutting losses 18. Strategy - stop losses and limited risk bets 19. Strategy - taking profits 20. Strategy - arbitrage 21. Opening an account 22. Placing a bet and managing your account 23. Regulation 24. Some more tips 25. Conclusion

• Financial Spread Betting
• The Beginner's Guide to Financial Spread Betting