In this piece of information, we will be accessing tips on how traders can determine risk when spread betting the foreign exchange markets and how much they should keep at stake per point.
To most traditional financial services, spread betting is a leveraged product. This means that the initial deposit payment will give you insight to a larger portion of an underlying market than if you bought it directly from a stockbroker for example.
This will translate that spread betting can result in large losses that exceed your initial deposit. And without the right risk management, it becomes possible you could lose everything over a short period of time. Therefore, it is very important to understand the risks involved and take the right steps to learning how to manage your portfolio efficiently.
While many investors trade the foreign exchange market as a traditional forex trader, you will always find many using the services of a spread betting company.
The first and foremost thing for forex traders is to identify how much of their account can be devoted to risk per trade. It is highly recommended that the risk per trade should not exceed two to three percent of the available capital at any point of time and for any trade.
The next step is all about looking at a stop loss for the specific setup. It is worthwhile to note here that there could be times when trades may not be automatically closed out at the exact stop loss due to slippage. Once all these things have been taken care of, forex traders just need to prepare for the next trade.
In short, traders need to simply work out how much they are ready to lose for determining the risk with forex spread betting and this analysis should be based on a percentage of the available capital. Once that has been done, traders need to determine how many points away they are going to place their stop loss. Thereafter, it is all about working out the stake per point and entering the trade.