Can you make big gains with a small spread betting bank? How often have I heard that?
Well here’s the answer… yes you most certainly can, but it depends on what you trade, how you trade and you as a trader.
Obviously Rachel! But that doesn’t help?
Ok, let me explain.
Spread Betting Small Banks – What to Trade
The first thing that you have to understand is that you can’t go flying into everything that’s hot and short everything that’s not.
Margin [your deposit on each trade] will have a critical impact and limit how much you can trade and what size stake you can use when trading with a smaller bank.
As an example, using a £1500 bank to start spread betting some markets is totally viable. You could be using £.50-3 a point and be OK If you were trading, main currencies and indices, Metals and other Commodities whilst using a stop loss. You will likely encounter margins of 10% and less at most of the big spread betting firms. These markets are often less volatile too.
In fact, with a bank of £1500, you can easily trade multiple markets and rank up some great profits quite quickly.
However, if you were planning to trade Crypto Currencies the margin can go to 50% and even higher. So using a small bank of say £1500 to start Crypto trading becomes a far less viable option.
You can read how margins are calculated HERE
So, before you start trading, think about what you want to trade and if it is going to be viable with your trading bank and point size.
How You Trade a Small Spread Betting Bank
If you are looking at day trading, then your money will not be in the markets for very long. Depending on what strategy you are using, you can expect to be in the market for minutes or from market start to market closing times and anything in the middle.
Often these day trading strategies require fluid markets and they tend to be the most heavily traded markets with the smallest spreads and margins.
Also you’ll find these strategies require guaranteed stop losses for new traders and the trading style often limits you to trading one market once a day or one market several times a day. In either situation stakes and risks are limited as well as potential profits.
So, small spread betting banks can work well in these types of trades as margin and risk are usually easily aligned.
Medium Term Trading
Medium term trades, sometimes referred to as swing trading requires you to look at holding trades from a few days to weeks at a time. You could be trading a few different markets at once. You will be looking to close losing trades quickly and let winning trades run.
You can open daily spread bets and keep rolling over or take a longer term contract. If you lose on the longer term contract then you have paid a larger spread to open the trade in the first place so lose more than if you open a daily trade. However, you pay interest on your winning trades if you keep rolling over a daily trade. Either or, sometimes you just have to keep rolling over a trade if it kicks off in the right direction… although it can be slightly more costly in fees.
Also when trading medium term, you’ll want to have back up funds to add to your winning trades. This means not tying up your entire bank on one trade.
Your Attitude as a Trader
Are you scared to let profits run? Can you even do it? It rolls of tongue… “cut your losses short and let your profits run”. But not many can do it. In fact, a lot of traders do the opposite; they hold on to losing trades and cut the winners short.
But without a doubt if you can master the above mentioned art, then that is the fastest way to bigger profits and bank growth.
It is my favourite way to spread bet.
If using day trading strategies, you can still grow your bank well and steadily over time, but the journey may be a lot slower.
The overall art to winning at trading is accepting what type of trader you are and staying with it.
I have always preferred medium term trading over day trading.
Here are some results and profits that I made using a small spread betting bank of £1500
I chose to start with £1500 as it is an amount most people can get their hands on. You can start with less though. I have traders that started with £500.
I did have losing trades in this account when trying to add to silver and gold.
As you can see, I have more than doubled my initial investment over the last couple of months by just letting my profits run with a few simple trades that anyone can make.
Of course these trades didn’t all just head straight into profit. At various times they were losing too.
The point here is to show you that you can make great returns with little trades.
So to recap…
Set aside some funds and decide what you are going to trade. Make sure your bank and markets are a realistic option.
Choose your strategy. Are you looking to nip in and out of the markets every day [day trading] or are you going to let your profits run and cut your losses short?
Once you have decided on the above, stick to it! Understanding what type of trader you are will pay dividends long term.
If you want to learn about some simple and FREE trading strategies you can use to get started in trading have a look here and here.
You can also get my online course HERE.
Don’t forget that I learnt how to trade with Vince Stanzione and still trade alongside him today. You can read more about his course here.