Fed up of picking the wrong shares? Then here are a few tips taken from Making Money From Financial Spread Trading 2013 edition that can get you on the right track and start making money from financial markets.
How To Make Money From Trading Shares using Financial Spread Betting
1. Buy strength, sell weakness
Everyone likes a bargain. It’s human nature! But here’s the truth: you don’t make money from buying bargains.
Cheap stocks often appear to be bargains after a large drop, but they often continue to fall. Buy break outs and sell them higher. Sell shares that are breaking down. Never let anyone tell you they are cheap and can’t go any lower!
2. Trade active stocks
Many newcomers don’t realise that while you have thousands of companies quoted on the stock market both in the UK and US, most of these stocks don’t move much.
If you look at the daily volume of share traded on many companies you, will see that nothing has been traded. Always trade active shares with volume, and sectors that are active or trending well. You can use my website or software like sharescope to filter out these opportunities and safe yourself time.You can also list all companies that are 20 days or less from their all time lows or highs.
Spreads are the tightest on the most active shares such as Vodafone, BP, Unilever, BT, and GlaxoSmithKline.
3. Look at shares as if they are people
Stocks often act like people. Each has its own personality. What’s more, a stock can change from one to another quickly. Like people, stocks can be steady, predictable plodders or aggressive and unpredictably. Charts and moving averages can help you spot the personalities which you can trade. On the whole we like quite and trending stocks.
4. Trade the trend
Don’t try to be smart and pick the top or bottoms, just trade with the trend. Of course the trend will never last forever, but by using a trailing stop you can lock in profits along the way. With Financial spread betting, options, CFDs and Futures we can as easily go “short” and profit from falling markets.
5. Add to winning trades never add to a losing trade
You’ll sometimes hear so-called experts advocate averaging down. Don’t listen! Never add to a losing trade. Instead, add to winning trades. If you buy £1 and the stock goes to £1.50, buy some more.
For long-term investments of five to ten years, buying units on a monthly average price may make sense, but never average down shorter term trades.
6. If the trade is wrong, cut it!
Your first loss is normally the smallest. If you were expecting something to happen and it doesn’t, simply cut it. Also, if you have a stop set and the share is heading towards it, don’t move your stop unless you have a very good reason to.
For example: if you start with £1,000 and you lose 20%, you are left with £800. You now need to make 25% to get back to £1,000.
If you let a trade move 50% against you, you will now need to gain 100% to get back to £1,000.
7. If you can’t see a trend then don’t trade
Markets and shares don’t always trend. In many cases a share could consolidate for weeks, months and years. Vince Stanzione likes to trade trends, and if something is not trending he recommends walking away. Come back when it starts to trend.
8. Let the winners run
For many, holding a winning trade is as painful as holding a losing one. The only way you can survive is to let winners run more than you let losers run.
f you have a plant in your garden and it is growing well and strong, you don’t dig it up and kill it. So, don’t do the same with your healthy trades. The majority do of traders do exactly this. As a broker, Vince Stanzione saw it all the time. He says clients often wanted him to sell their winning stocks, and keep their losing stocks!
Use a trailing stop to lock in profits. If you really find it hard to let a winning trade run then part close the trade and run the rest.
To learn everything you need to know about trading successfully click here You can apply Vince Stanzione’s proven strategies in less than 15 minutes per day.