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You Are Here: Home > Stockmarket & Trading > Spread Betting Section > FAQ : Question & answer
The most important aspect of Spread Betting
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Without doubt - Capital Preservation. This applies to every aspect of trading and investment whether on stocks, commodities, bonds, futures - anything and everything.

And why is capital preservation so important? Two factors -

  1. If you lose your capital your can't trade any more, and
  2. If you can't bet you can't win
However, it's unlikely that anyone will lose all their capital in 1 or 2 trades but you only need to lose 50% to get into serious trouble. Lose 50% and you've got to make 100% just to get back to even. And as simple as that equation is, many people don't realise it until it happens.

Trading and speculation is therefore more about risk control than generating profits. It's not about how much profit you make, rather how much risk was taken to earn that profit. Risk £1 to make £5 is far better than risking £10 to make £15.

Sadly many people think that successful trading is all about the profit, which is why they'll happily risk large amounts of their capital. They then wonder where it all went wrong.

My advice is simple, always use stop losses and risk no more than 5%, preferably 1%-3%, of your total account on any one trade. Risk more and it's probably odds on that you'll lose money over time because of the leverage. So it might take just 1 or 2 trades to lose 20%, 30% or maybe even 50% of your account.

WARNING! - Spread Bet Broker Advice



There are good spread bet brokers and there are bad ones.

Having a good broker won't guarantee you profits but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.

So who do I recommend?

Simple, the 2 brokers I personally use for my own spread betting (and I've used them for years) -

FREE Report : How to Learn Spread Betting and Prosper
How to build the all-important trading experience
Where to get trading help and advice
Which broker to use and why
Simple 2 month training plan to follow
Download the FREE report
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