I finally signed up to IG Index and my account is now up and running. The good thing with this account is that it allows me to sign up to a training session (as they don’t offer a demo account). The benefits of this are that I can trade as little as .15 cent for the first two weeks as I learn the ropes. Thinking I knew the ropes has unfortunately made me more arrogant than I have right to be. This has cost me a few pounds.

When you open a new account with a spread betting company make sure they offer some kind of trial. This can be a demo account or an ease in introduction as IG Index offer. Before this I have been using various other accounts which operate in very different ways. A simple example of this is a stop loss. IG Index ask you to place the number of points away you want the stop to go (i.e. 20 points) where as other accounts make you place the exact market number (i.e. 6520). You can see how this could easily land you in hot water. Other differences are in the way daily bets are settled, placing orders, amending orders etc. These can differ substantially from firm to firm so make sure you try before you buy.

The great thing about spread betting is that you never stop learning. This is a case in point. Markets routinely like to shake things up. These shakes are created by the infamous “Market Makers” whose job it is to keep things interesting. A market maker is actually a firm who quotes both a buy and a sell price in a financial instrument or commodity, hoping to make a profit on the turn or the bid/offer spread. Now and then during the trading day but more generally at the open and close you will see dips above or below resistance points. These are anomalies when looked at in the content of the general emerging trend. The purpose of these spikes is to catch traders out and who have positioned their stop losses at a key resistance points or close to them. In general these spikes are only going to be a rise or fall of 10 points or so below or above a resistance point.

Say for example you buy the FTSE at 6523 and the FTSE shows a resistance point of 6500. Well the key place to position your stop loss is a few points below that at a non rounded number for example 6487. This allows you extra breathing space when the markets get the odd shake.