Timing Your Spread Betting Entries and ExitsBy City Index, PRNE
Friday, January 28, 2011
LONDON, January 29, 2011 - Timing is vital in every form of financial trading, and spread betting
(www.cityindex.co.uk/spread-betting/) is no exception. The points at
which you open and close a financial spread betting position dictate the size
of any profit or loss you eventually make. It is therefore vital that you
learn to enter and exit your spread bets at the right times.
Unfortunately, many traders do not. A recent study commissioned by
Barclays Wealth analysed the actions of retail investors investing in equity
mutual funds between 1992 and 2009. The study revealed that the market timing
decisions made by the investors actually slashed their returns by an average
of 20 percentage points over the 18 year period.
Though not a spread betting study, the principle remains the same. Timing
your entry to and exit from each trade is a fundamental part of financial
Entering a spread bet
When financial spread betting, do you do extensive homework before every
trade? Or are you an instinctive spread bettor, basing most of your trading
decisions on hunches? Traders who understand the way a market moves and what
might affects that movement will be in a stronger position to time their
entry to a spread bet. Remember, all successful traders know exactly why they
have entered a trade.
In order to help time your entry to a financial spread bet, you might
also employ charting techniques or follow expert market commentaries, both of
which are offered by City Index at www.cityindex.co.uk/.
Exiting a spread bet
You should never forget that your exit from a financial spread betting
position is just as important as your entry to it. "Cut your losses and let
your profits run" is an oft-cited trading mantra, but it is easier said than
done. Sandy Jadeja, Chief Technical Analyst of City Index, says: "As a trader
it is easy to enter a position hoping it will move in your favour forever.
But at some point the market will turn and you may find yourself holding on
for dear life wishing that your position would turn from red to black. The
key to long-term success is knowing when you should cut a losing position."
A strong understanding of your market and the news activity surrounding
it will pave the way for timely spread betting exits. You can also put in
place stop losses and limit orders to automatically close your spread bets at
set trigger prices.
Ultimately, the more time you dedicate to understanding the markets, the
stronger your timing will become when spread betting on them. With this in
mind, you can sign up for a free 2-week trial of the City Index daily market
www.cityindex.co.uk/market-analysis/daily-newsletter.aspx and keep up
with all the latest activity.
Alternatively, open a spread betting demo account at
www.cityindex.co.uk/learn-to-trade/demo-account.aspx and practice
trading the markets with a GBP2500 virtual cash balance.
Spread betting and CFD trading are leveraged products which can result in
losses greater than your initial deposit. Ensure you fully understand the
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
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, CFD trading
(www.cityindex.co.uk/cfd-trading/) and, in the UK, 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. For more information, visit www.cityindex.co.uk/.
Contact: Joshua Raymond, City Index Group, Tel: +44(0)20-7107-7002, Email: joshua.raymond[at]cityindex.co.uk; Jonathan Smith / Alex Nekrassov, New Century Media, Tel: +44(0)20-7930-8033, Email: jsmith[at]newcenturymedia.co.uk /
Tags: City Index, January 29, London, United Kingdom