1)
It's possible to profit in all market situations
Today thanks to spread betting you too can benefit from
markets, shares, currencies and commodities to go down
(Short Sell), to go up (Long Buy) and to even move
sideways (Barrier Range), where you would wager for a
market to stay within a range of 3,300 to
3,900 for the next 25 days.
Just take note, shares and markets fall faster than they
rise so
you can make much more money in a falling market than a
rising one. Additionally, the financial markets are like a
seesaw, if money flows out of one market, say equities,
then it will flow into another market, such as commodities
or bonds. When the US dollar is weak, then the Euro, Swiss
or Australian Dollar will be strong. Trading is a zero sum
game, theres is always a winner and a loser.
2) Start small and build up
No successful trader commences his business in a big way.
For my own spread trading I started out with £2,000 of
risk capital. Small bet sizes and virtual accounts
provided by some financial bookmakers can help you trade
via a real system with no risk. You can eventually move on
to trading with small stakes and build up.
3) Diversify
The benefit of trading with a financial bookmaker is that
it allows you to trade numerous products such as
currencies, commodities, stocks and bonds all from a
single account, yet the majority of customers stick to
FTSE or DOW. By spreading out your bets you reduce
risk especially in non-correlated markets, i.e. S&P500,
Dow, FTSE, Dax are all major stock indices, you can
honestly say if the S&P goes down, the others follow. On
the other hand, if you traded one of the above and also
Gold, Oil, 10 year T bonds or $/Swiss Franc, you would have a far better balanced
account. So let's say £2 a point short on S&P500 and £5 a
point long on Gold.
4) Know your personality and trading style
If you think "day trading" and short-term bets sound
exciting the truth is that capital will not derive from
short terms bets but by trading trends over weeks, months
and years. While brokers and bookmakers enjoy generating
more business from active customers, the winners in the
long run are the least enterprising traders.
5) Money management is the key to survival
A good trader will not be required to make money that
often. Indeed, you could get 80% of your trades wrong and
still make money. However confident you are that the
market will crash or XYZ is going to soar, make your first
trade a small one, and then, if you are correct, add more
to that trade. Pyramiding a flourishing trade is the key
to making large returns. Never add to a losing trade!
6) Cut losses and let winners run
Trading boils down to psychology and everyone wants to win
and no one likes to be wrong or be classed as a loser.
What I advise is that you have a mechanical approach to
exits and entries. That is, you put a cut out point in
place on opening a trade. Financial Bookmakers provide a
guaranteed stop loss on most products. This denotes that
you can place a bet knowing that the most you can lose is
known, yet your profit could be unlimited. Another good
idea is to trail stops, which means you lock in some
profits yet keep the trade running. When a trade shifts
into profit, you could move the stop loss to your entry
point; this denotes that the worse case scenario is a
break-even trade.
7) Treat Financial Spread Trading as a business
If you fancy making real money, then you need to treat
this as a business and work to a professional standard.
Chronicle details of your trades, invest time and money to
learn to trade, and continue to update your skills. It is
a never-ending learning process.
8) Don't get carried away by technology
It is easy to get excited by all the great software,
on-line trading, real time data etc. The truth is, less is
more, and too much knowledge makes you a worse trader. The
more complex your system, the less chance it will work or
that you will follow it. The most important factor when
trading any market is the price. The price conveys the
truth and should always be obeyed.
9) The crowd and media is normally wrong
One of the best times to buy is when the pack is terrified
and there is blood on the streets. Markets go
down because of lack of buyers, not because of sellers.
For a bull market to proceed you need new money to keep
the party going. If everybody is bullish on the market,
then it has no other way to go but down as everyone that
wanted to buy has already done so. A classic example of
this was the NASDAQ in March 2000.
10) Don't feel you have to trade all the time
Only gamblers place wagers on markets every single day. In
some cases the best trades are the ones you do not make.
Getting involved in Trading can get addictive for losing
traders who want to get even and winning traders that now
are on a roll. Markets
have been here for years and they will be here for many
more to come. |
