Spread betting in a volatile market is challenging. The markets can suddenly leap up or plunge down, leaving you with either a healthy profit or unexpected loss.
Spread betting provider City Index offers these tips for spread betting during a volatile market.
Having a spread betting platform on your mobile phone allows you to constantly keep abreast of the markets. If you are away from your desk when news breaks to cause market volatility, mobile trading lets you react immediately.
A guaranteed stop loss offers a greater level of spread betting security than a standard stop loss, guaranteeing to close your trade at an exact value regardless of market gapping.
For example, if you opened a spread bet of £1 per point on the UK 100 at 5000 and were only willing to lose £200 on the trade, you could place a guaranteed stop loss order at 4800.
This way, if market activity pushed the index past 4800 straight to 4750 (market gapping), the trading platform would still close your spread bet at 4800.
Guaranteed stop loss orders incur a small premium for this extra insurance to your financial spread betting.
Remember that volatility is a necessary evil in spread betting. Without market movement you cannot make a profit. There is, however, a line between a volatile market and one that is too volatile to trade. Always bear in mind that standing aside is always an option.
Spread betting and CFD trading carry a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
Content approved / provided by City Index Limited which is a company registered in England and Wales, number: 1761813. Authorised and Regulated by the Financial Services Authority. FSA Register Number: 113942.
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'Online Spread Betting in a Volatile Market', Review by D. Jones, last update: 20-May-11
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Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it may not be suitable for all investors. Ensure you only
speculate with money that you can afford to lose and that you fully
understand the risks involved and seek independent financial advice where necessary.
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