London, England -- (SBWIRE) -- 04/15/2011 -- Financial spread betting carries a high level of risk. For this reason, regardless of your ability to place stop loss orders and interpret the markets, spread betting with any kind of frequency means making a loss from time to time. In the long term, however, the loss itself is less important than the way you hone your spread betting ability in reaction to it.
Before a spread betting loss
When a spread betting position starts to move against you, it is easy to convince yourself that the situation is temporary and will soon turn around to put you in spread betting profit. After all, you entered that spread bet for a reason.
This pattern of thinking can turn relatively small spread betting losses into much larger spread betting losses. It is obviously not impossible to profit from a position of unrealised loss, as the market may well turn around in time. This, however, will quite possibly happen only after the market has reached the point where your spread betting account can no longer afford to keep the trade open.
Instead, you should have a considered, rational system in place before you start spread betting and stick to it. Make sure your spread bet entry, objective and exit are all covered. If you plan to cut your losses at a certain point, make sure you cut them there. If you decide to place your stop losses at certain levels, do not move them any further away from the market price. Ultimately, do not let emotion dictate the way you run your spread betting.
After a spread betting loss
Quite often, a loss can actually be more valuable to your financial spread betting education than a profit. Do not simply put it down to bad luck and move on; think about what happened. Did you move your stop loss to accommodate a potential turnaround? Did you research the spread bet fully? By working out how not make the same spread betting mistake twice, you can tailor your own individual spread betting system to make it more effective.
Find more ways to get the most from your financial spread betting at http://www.cityindex.co.uk/learn-to-trade/.
Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
About City Index
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, spread betting.
We constantly look to improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support. For more information, visit http://www.cityindex.co.uk/.