Financial spread betting can be exciting and rewarding, but only if you have taken all necessary precautions and have been fully researched and accustomed to the way in which it operates. One of the most important requirements is to understand what you need to have a very good money management system in place. This can protect your investments so that when you win, you do not lose all or more. Money management is essential in the long term and should be followed carefully.
Many profitable and successful traders have indicated that a large part of their success in spread betting is that they have developed and strictly follow certain money management techniques, whereby they will set up a certain percentage of their capital as the value of the maximum loss.
Many successful financial spread betting investors makes use of a fixed percentage rule '. This indicates that it intends to take a certain percentage of capital and distribution for each of your bets. It has been reported in many websites investment that 2% is the most widely used rate. This may not necessarily be what you are comfortable with, however, can be used as a base starting point. There are several approaches to using this method.
In General, there are two main issues that must be answered in a satisfactory level. They will help you determine what percentage of your capital, you are most comfortable with risk if you keep losing jobs.
1. What is the largest amount you can invest that will keep within the range you have set in my risk management plan?
2. what portion of my current spread betting capital must be my next trade that are keeping me from my current strategy to manage money?
Once these questions have been answered adequately and are ready to open your spread betting locations you must then decide your positioning sizing. In essence, this means that you need to make sure that in case of losing one location your stake is more then what you have decided upon as your maximum loss.
Even after you have made all your historical research and you've followed the trends and highlighting which areas and products you want to start spread betting then you must remember that profiting is only half the equation. The other half is the retention of profits or earnings over a period of time. Management structured money is required in the long term.
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