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If you are thinking of getting involved with spread betting or trading stocks, currencies or any of the other instruments out there, there are some fundamentals that you need in place before you start.

Understand the players in the market

To understand the players in the market you need to understand what drives them. Normally they are driven by either greed or fear. These two emotions are what cause many people to lose their money when they dabble in financial markets. Making some money on a few trades or bets creates greed in many people and they think that they are doing everything right and that this trend will continue. They start to ignore the rules of trading that they adhered to when they began more cautiously. If on the other hand they find themselves on a losing streak, they will undoubtedly start to think that they and their system are no good and they will probably quit. To succeed you need to understand your attitude towards risk and to try to overcome your fears if things start going against you, so long as you are following your system.

Stick to your system

Spread betting is not something you should enter into without a system. When you are a beginner, you may well amend your system over time as you test out different strategies for spread betting. You need to make sure you know the type of market you are in so you know which strategy from your system to use.

Know how much to bet

It is crucial to know how much you can afford to lose before you begin spread betting – this is your betting bank. The amount of money you bet on each trade should not exceed 2-3% of your whole bank. This reduces your risk. A stop loss is another tool you should employ religiously. This will limit your losses should the market not go the way you want it to.

The above tips on spread betting are the basics that all beginners should employ to ensure their new hobby does not turn into a disaster.