I often wonder if spreadbetting is frowned upon by the purists out there trading FX but I love and much prefer it. Not only for the tax relief but also because of the agility with which you can enter and exit a trade.
There are times when I like to fancy myself as disciplined even though I am far from it. It is during these times that I inevitably consign to stick to the well published guidance of never having more than 1%-3% of one’s book exposed at any given time, and playing the book of numbers where you can actually lose more times than you win and still be profitable.
But is this really possible when spreadbetting?
If I have £10000 then I know I should never be traiding with more than 100£-300£ at a time under the guidance. Once the 300£ is lost I am stopped out and looking for the next sure thing…with some foundational rational behind it of course.
However in spreadbetting you are often betting much smaller amounts, with more bets on the tabl!e, even though you may have the same size of account. So my question is ‘How does one responsibly calculate ones stop loss without playing it too safe when spread-betting?
My least favourite aspect of spreadbetting is the fact that has ‘betting!’ In the name. It conjours up sad visuals of lonely hearts leaning against filthy Reno slot machines with hands stained from the bucket of quarters they’re clutching.
Maybe I’m over thinking this. Perhaps I’m under thinking this. Either way if anyone out there has a system they’d like to share I sure would be obliged.
I’ve got no skin in the spread betting game, but I found using search. I’ve wondered the same for some time, so maybe this will work for you. Could be something to look into:
There’s nothing inherently dangerous or immoral or corrupt about spreadbetting, and in TA / risk management / money management process it doesn’t differ at all from trading. It is a very low cost way of getting access to markets, with stakes as low as 10 pence per pip / point.
In fact, it is in some sense an inherently honest means of access to trading - firstly because it has “betting” in the name, and all trading is essentially gambling of a sort - secondly, because it does not pretend to be offering access for the private retail trader to the underlying market, the SB firm acts as a bookmaker and you’re trading based on their price for e.g. the EUR/USD, not the price that a commercial bank trades at.
The only problem with SB is that it attracts people with a get-rich-quick mind-set.
I spread bet, I don’t feel any stigma. To OP’s specific question, any form of trading - indeed, any form of business, and most aspects of life…!) require some form of discipline if they are to be successful.
For my spread betting, I simply never risk more than 1% of my account on a single trade, and never have more than five trades open to risk at any given moment (note that I might have more than five open trades, if I have trailed my Stop up to lock in profit on some of them). I also avoid correlated charts.
But I can still hold trades for days at a time, have Stops of over 100 pips, do all the things a ‘proper’ trader would do on my spread betting account. Thing is, it’s all just labels. Ultimately, we’re all looking at a chart, forming an opinion, then backing that opinion with money. And a chart’s a chart.
