There are two important facts about online trading; there are those in it to make money and those who walk back home with discouraging losses. This doesn’t mean there are spread betters who are destined to lose, the problem lies in the strategies they employ. Which in many times are misguided decisions because they fail to see the following blind spots:
1) No Tangible Trading Plan
Because the name of the game is spread betting, many traders go at it without a solid plan to follow. It’s like comparing the trade to playing online slots where you just pull a lever and the wheels of fortune automatically turn for you. Without a real trading plan, you cannot clearly define the losses from the profitable ventures. You are also bound to over trade or under capitalized in the hope that one of your moves will pay off. In the event of so many losses incurred, you end up liquidating the good trades then go home with the bad ones.
2) Believing Everything You Hear
Most traders starting out don’t know whose information is most credible so they believe everything that comes their way. They are quick to believe the newspaper headlines and any other print material because they just don’t see how the information can be faulty. But here is the shocker; most of this information is faulty. What you don’t realize is a lot of this information is already discounted by the media because it lacks credibility. Putting all your trust on such information is setting yourself up to fail.
3) The Longshot Trader
After a few profitable trades in stock prices, they believe they can take on the world. You can easily spot such traders in the market because they are never conservative and make most of their betting decisions from longshot hunches. Moreover, they are the kind of traders who put all their money on one deal because they strongly believe nothing can go wrong—until it does.
4) Betting on More with Less
Another problem of the traders guided by a hunch is the fact that they take on big trades after their first wins. They don’t respect the process and feel they are ready to share a table with the stock market multi-billionaires who go for the bigger and most rewarding risks. So they over trade and continue trading even when they lack the money in their accounts. Not only does this lead to huge losses, most of these traders sign out of the stock market with debts they can never pay back.
5) Trading One Direction Alone
Not every novice spread betting trader gets it wrong the first time, some actually start off well. However, a great deal of them end up stuck because of only trading in one direction; that is always calling long bets and avoiding the short bets, or vice versa. A good stock trader should be able to trade up or down, and this applies to everyone whether a novice or veteran.
6) Failing to Manage Risks
Learn to cut off the losses at an early stage when they start happening. A lot of the traders out there hold onto bad trades in the hope that things will turn around and start being profitable. But it never does, then the losses start becoming bigger until the finally let go. By this time, they have a big depression in their financial accounts and a mind too disillusioned to continue trading.
Then there are those traders with too big an ego to accept the small losses. They just don’t see how they can lose $100 in a span of seconds. So they do the unthinkable as well; continue putting money on that particular stock until it wins them back their lost money. And we all know how that story goes too well.
7) Lack of Experience
Honestly, it all boils down to this one fact that the beginning trader lacks no experience in the game. And instead of seeking advice from experts like CMC Markets or practicing with dummy accounts, they go on to trade blindly and with full-fledged emotions. Not many of these traders get to see the light at the end of the tunnel but add to the section of angry commentaries that sound something like “This site is a scam! They took all my money…” and many different variations of that.
Spread betting is not rocket science, you only need to understand the dos and don’ts. Start by following the above advice then subscribe to credible spread betting websites like CMC markets and learn as much as you can.