Know your market
When does the underlying market trade?
City Index offers thousands of different markets from around the world, and the trading hours vary accordingly. When placing a spread bet you should be aware of what the trading times are for your market and when you will be able to access live prices. For example you can trade the UK 100 before the UK market opens at 08.00 (London time) and after it closes at 16.30, even though the actual market is closed.
What units are you betting in?
The unit that the points movement is based on varies per instrument. Indices are traded per 1 point and UK shares are traded per penny movement. But other markets are traded with different tick sizes. You can look up the 'bet per' in the market information sheets.
For example, gold is traded per 0.1. This means the points movement is calculated on the first number after the decimal point ie 1256.2/1256.6. The spread here is 0.4.
Are there key announcements due that may affect the market?
The key economic indicators that affect most market indices are worldwide interest rate decisions, UK and US Gross Domestic Product (GDP) figures and the US Non-Farm Payroll number. Equally, company results and earnings statements may affect the share price of a specific company and potentially others in their sector too.
Have a trading plan with realistic targets
A trading plan should provide a general set of rules which you can refer to. The plan might specify things such as:
- Profit goals (per day, chapter, month, year)
- Maximum losses you are prepared to take
- Size to trade at any one time
- Entry/exit points
Without a set of rules emotions such as greed, fear and hope may take over and lead you to make irrational decisions. Learn more about trading plans.
Discipline, discipline, discipline
- Stick to your trading plan
- Don't use your entire margin up with a single opening trade. Always ensure you have sufficient funds in your account to cover any losses for the period that you decide to hold open your trade
- Use stop losses and don't be tempted to run losses
Expect losses and keep emotions in check
Sometimes, the factor that determines how successful your trade will be isn't the amount of research you did, but your mindset at the time.
As you trade, try to stay objective and calm. If you have a losing trade, resist the urge to enter another trade immediately just to win your losses back.
Even the best traders in the world get it wrong. Analyse your losing trades and learn from your mistakes. Many traders don't learn from their mistakes because they don't like to think about them.
Keep informed and up to date
- Make use of all the resources available to you to maximise your understanding of the markets
- Take advantage of a demo account to test your trading strategies and learn how to use the platform