Financial Spread Betting – Make Risk Management Part Of Your Strategy

Posted on 27th January 2011 in Financial Business, Strategic Planning

Financial Spread Betting Financial Spread Betting – Make Risk Management Part Of Your Strategy Investors are increasingly seeing spread betting as a very cost efficient way of taking a position on the financial markets.

With financial spread betting you bet on margin which means that you benefit from increased leverage. That is, you pay a small initial deposit (margin) and that allows you to take a larger position than you would be able to in say traditional shares trading.

Profits can be substantial but so too can losses, that’s why it’s important you understand the financial market you are betting on, proactively manage your risk and always keep a close watch on your open positions.

Risk management is always at the core of any successful financial spread betting strategy.

Controlled Risk Stops and Guaranteed Stops

Placing a stop on your bet is very important. For every bet you place simply calculate how much you can afford to lose and place a stop at the exact position in the market where you would exceed that amount.

Guaranteed stops do exactly what you would expect them to, that is, even if the market is subject to ‘slippage’ (a sudden, rapid movement) your position will be guaranteed to close out.

Monitor All Positions Closely

Keeping an eye on your open positions is very important too. Financial spread betting is done on margin and that can be an advantage, but remember, if a market quickly moves against you, you might have to increase the amount of your original margin as security.

While it’s up to you to monitor your margin on all your positions, if you receive notification from your provider that more margin is due, do not ignore them.

A recent report by research organisation Investment Trends suggests that the largest spread betting company in the UK is IG Index. IG Index offers both free education and expert analysis to those who are new to financial spread betting and those with more experience of it. They also provide a free, expert, weekly commentary on the financial markets.

You can find out more at: www.igindex.co.uk.

IG Index is part of the IG Group, so too is IG Markets, the CFD Trading company.

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