How Risk Management Can Increase Your Spread Betting Profit?

How Risk Management Can Increase Your Spread Betting Profit?


Spread betting has become really popular as an alternative to traditional stock trading, and it’s one of the best ways to invest your money in a wise way to watch it grow with minimal effort on your part. Nevertheless, there are risks involved with spread betting, and practice does really make perfect in terms of being able to make the right bets and getting the highest profits on your investment.

How can risk management, in particular, increase your spread betting profits? Continue reading to learn more.

First Off, What are the Risks Involved in Spread Betting?

Before understanding how managing risks can help you increase your spread betting profits, you need to understand what the inherent risks of spread betting are in the first place.

Basically, spread betting is unlike the majority of traditional investment and trading options out there because it’s considered a leveraged product. What does this mean? Put simply, the initial deposit payment that you make will give you exposure to a larger portion of the underlying market than you’d be exposed to if you were to have purchased an instrument directly, such as through a stockbroker.

This ultimately means that spread betting could potentially result in you losing quite a bit of money, and the losses could exceed the initial deposit that you make. Therefore, if you don’t have a good risk management strategy in place, you can lose a lot of money over time.

Use Stop Loss Orders

Stop Loss Orders, also referred to as SLOs, could be used when you want to close a falling trade once the market passes a certain trigger value that you’ve set. In other words, you’ll be able to automatically close a trade and essentially cut your losses when the market ends up working against you.

Go a Step Further and Use Guaranteed Stop Loss Orders

Guaranteed Stop Loss Orders are an even better option than standard Stop Loss Orders. In fact, they’re considered the most efficient tools in risk management for spread betting. Basically, they operate in the same way that a standard SLO would work, but they also go a step further by guaranteeing to close the trade at the trigger value set. This gives you additional peace of mind. Just be aware that these SLOs come with a small premium.

Use Opening Orders

In addition to stop orders, you can also use opening orders to manage your spread betting risk. These will open new trades at your specified price automatically, so you can enter a market when you’re ready and when the price is right rather than when the market isn’t at the level that you’d prefer. Just like a Stop Loss Order, an Opening Order can help you make profits and reduce losses.

In addition to the tips above, consider checking out other helpful websites, such as Reviews.SpreadBetting, that provide information on spread betting and the best brokers out there. This will help you fully prepare for what lies ahead in the world of spread betting so you can be successful.