Spread Betting - How Much Should You Stake?

LONDON, July 27, 2011 /PRNewswire/ --

Opening a spread betting position requires you to ask a number of questions. What market should you speculate on? What price should you enter at? What is your exit strategy? Where should you place your limit order? How much capital should you stake on a trade?

There is no blanket rule for how much of your capital you should stake on a spread betting position, but you should never risk everything on one trade. Playing the long-game may not be an exciting way to speculate on the markets, but it tends to be significantly more productive.

Some trading experts believe you should not risk more than 3 percent of your capital on a single spread bet or CFD trade. This means if you had £5,000 in your trading account, a single trade should never cost you more than £150.

Using a calculation like this should make it easy to decide how much to pay per point, and where your stop loss should be placed. The aim of planning ahead is to limit the amount of decisions you have to make in the heat of the moment, which is often when the heart overtakes the head. As any spread bettor knows, decisions made by emotions are often foolish.

Learn more about spread betting strategies at City Index, by visiting:

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, contracts for difference (CFDs) and, in the UK, financial spread betting.

We constantly look to widen the range of assets we offer, 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. Visit http://www.cityindex.co.uk/ for more information.

SOURCE City Index

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