One thing I have learnt is you need a decent amount of money in your account to make any success of spread betting.
I was looking at a new FTSE 100 trade alert system this morning – a system that simply tells you when to go long or short on the FTSE 100 based on the Elliott Wave Theory.
What I liked about these guys is that they are honest.
A lot of the trade alert systems and forex trading systems will tell you that they offer guaranteed returns that are simply fantastic. Indeed, some will tell you that you will soon be able to enjoy a 5 hour working week.
Of course this is rubbish. Nothing in life is free or easy – especially when it comes to spread betting.
Anyway, these guys say that if you follow the instructions and stick by them your win to loss probability is 68%.
Which is a decent probability I am sure you will agree.
They also point out that you need your stop loss set at least 250 points away. So a 1£ bet on the FTSE 100 will give up £250 should it go wrong.
Having been in the game for a while now this throws up an important point as to how much money you are going to take into your spread betting hobby / career.
I opened up my original account at £100 – this should give you some insight into how I approached things.
Essentially the cycles of the market require you to be able to cushion short term losses in your spread betting account before you can book any profits on your trades.
If you are going to go long, you must expect short term losses. Before I had a strategy I would look at my account, see it in the red, panic and close out without realising that the losses were punches I would have to roll with if I was to win.
That is a sure way to empty your account.
Based on all I that I have learnt I would say start spread betting with at least £600 in your account and work out a strategy based on this figure.
And remember taking the hits is necessary before booking the profits.