PRN: Spread Betting - How Much Should You Stake?
Playing the long-game may not be an exciting way to speculate on the markets, but it tends to be significantly more productive.
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 Â£5,000 in your trading account, a single trade should never cost you more than Â£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.
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