Hold on. If you’re starting with spread betting and want to avoid the classic wipeout, you need two things: a simple staking plan and rules you actually follow. This article gives you those, with real numbers and short examples that you can use tonight, and the next paragraph will show the simplest rule to put in place first.
Here’s the thing: treat bankroll management like a safety harness rather than a magic formula—its job is to keep you in the game after the inevitable losing streak, not to turn a tenner into a mortgage deposit overnight. Start by choosing a sensible risk-per-trade cap (I recommend 0.5–2% of your available bankroll for most novices), and the next paragraph will show how that looks with actual numbers so you can plug them straight into your platform.
Example in practice: with a $2,000 bankroll and a 1% risk limit, your max loss per position is $20; so if you set a stop that equals a 50-point move, your stake size should be $20 / 50 = $0.40 per point. That calculation gives you clarity before you press buy, and next we’ll walk through a short comparison of common staking methods so you can pick one that fits your temperament.
Staking Methods Compared
Quick note. There’s no one-size-fits-all; fixed stakes feel comfortable, fractional methods protect capital, and Kelly maximises growth but swings wildly. Below is a compact comparison so you can see strengths and weaknesses at a glance, and the following paragraph will unpack how the math changes outcomes over sequences of trades.
| Method | Core idea | Best for | Main downside |
|---|---|---|---|
| Fixed Stake | Same £ per trade | Beginners who want simplicity | Doesn’t scale with bankroll |
| Fixed Fraction | Fixed % of bankroll (e.g., 1%) | Risk control & long-term survival | Needs discipline after wins/losses |
| Kelly (Full/Partial) | Stake based on edge & variance | Mathematically optimal growth | Very volatile; needs accurate edge estimations |
| Volatility-Adjusted | Stake scaled to market volatility | Consistency across asset types | Requires extra calculation |
If you want a straightforward rule to actually follow, pick fixed fraction and cap it at 1% until you can consistently keep losing streaks in perspective; next we’ll run a mini-case to show why that stops you blowing up on one bad run.
Mini Case: $2,000 Bankroll, 1% vs 5% Risk
Wow! The numbers bite. With a $2,000 bankroll and 1% risk you lose 20 trades in a row and you’re down about 18% of capital if each loss is equal (compounding makes exact numbers slightly worse), but with 5% risk you blow close to half your bankroll after 14 losses and you’re dangerously near ruin. This demonstrates why risk-per-trade matters, and the next paragraph will translate that into a simple habit you can apply immediately.
Practical habit: always calculate your stake based on risk per trade first, then set your stop and target, and only then place the trade—never the other way around. Keep a short trade journal (date, instrument, stake, stop distance, outcome) so you can measure real edge over 50–200 trades; the following section lays out how to size stops and stakes across different instruments.
How to Size Stops & Stakes by Instrument
Hold on—not all markets are equal. Forex majors tend to have lower per-point values and less slippage than thinly traded commodities, so your absolute stake should reflect volatility and typical spread. If you trade indices with larger point moves, adjust stake down so dollar risk equals your percent-of-bankroll rule, and next we’ll show the volatility-adjusted formula you can use fast.
Quick volatility rule: Target Dollar Risk = Bankroll × Risk% ; Stake per point = Target Dollar Risk / Stop distance (in points). For example, Bankroll $5,000, Risk 1% → $50 risk. If your stop is 25 points, stake = $50 / 25 = $2 per point. Use that same formula across assets so your risk is consistent; the next paragraph will explain when you might choose Kelly instead and why many traders prefer a partial Kelly.
Kelly & Why Many Traders Use Partial Kelly
My gut says Kelly sounds smart. It is—mathematically it maximises long-term growth if you know the edge and win rate—but small errors in your edge estimate turn Kelly into a wrecking ball. That’s why many pros use a half- or quarter-Kelly, effectively tempering its swings, and the next paragraph will show the simple Kelly formula and an example you can compute on a phone calculator.
Kelly fraction = (bp – q)/b, where b = win payoff ratio, p = win probability, q = 1 − p. Example: if your average win is 1.5× risk (b = 1.5) and you win 55% of trades (p = 0.55), Kelly = (1.5*0.55 − 0.45)/1.5 = (0.825 − 0.45)/1.5 ≈ 0.25 (25%). A half-Kelly would be 12.5%. If that feels high, scale down to a fixed-fraction of 1–2% for safety, and next we’ll discuss how platform choice and fees change effective bankroll math.
Fees and platform constraints matter more than you think. Margin rates, financing fees, and bid/ask spreads can turn a profitable edge into a marginal one, so always calculate expected cost per trade and fold it into your edge estimate; in the next paragraph I’ll show where you can see these numbers on a broker’s quote and how to compare them cleanly.
If you’re comparing venues, check trade cost per typical position: (spread + commissions + financing) expressed in $ per round-trip at your normal stake—this is your hurdle to profitability. For checking examples and platform reviews, you can read more at thisisvegass.com, which lists typical payment and fee scenarios that affect effective edge; next we’ll explain why psychological rules are equally critical to math rules.
Psychology: Rules You Must Automate
Here’s the thing. Discipline dies first when you’re losing, and small rules you automate (hard daily loss limits, cooldowns after two losses, fixed trade entry checklist) win more than perfect strategy plans that you ignore. Automate a 24-hour cooling-off after 3 consecutive losses exceeding your daily loss limit, and the next paragraph will give you a simple daily routine to enforce these limits.
Daily routine (5 steps): 1) Review open positions and required margin; 2) Update trade journal from yesterday; 3) Calculate max allowed risk today (Bankroll × daily risk cap); 4) Set alerts for stop levels; 5) If you hit loss cap, log off for 24 hours—this keeps behavior in check and the next section will give you the Quick Checklist you can screenshot and stick by your screen.
Quick Checklist (Print and Stick by Your Screen)
- Bankroll amount and % risk per trade (write as a number, e.g., 1%) — this keeps priorities clear for the next trade
- Stop distance in points and stake calculation (Target $ risk / stop distance) — calculate before entry and confirm the next trade follows it
- Max daily loss / session loss and auto cooldown rule — define and enforce it so you don’t chase losses
- Fees/spreads accounted for in edge estimate — note the platform you’ll use and its cost per typical trade
- Journal entry template (instrument, entry, stake, stop, outcome) — update immediately after trade to avoid memory bias
Stick to that checklist so decisions are mechanical under pressure, and the following section lists common mistakes and how to avoid them in plain language.
Common Mistakes and How to Avoid Them
- Chasing losses: stop automatically after hitting daily cap; log out and reset after 24 hours to prevent tilt, which we’ll explain how to catch below.
- Overleveraging: don’t confuse available margin with sensible risk—use dollar risk per trade, not margin percentage, and check your broker’s margin calls to avoid forced liquidation.
- Ignoring fees: always subtract estimated fees from expected win to test true edge; if fees exceed expected edge, change strategy or instrument.
- Counting on luck: avoid streak-based bet sizing (gambler’s fallacy)—base stakes on fixed rules and adjust only when your empirical edge changes over 100+ trades.
- Not verifying withdrawals or tax rules: keep records and check local regulations so surprises don’t force rushed selling, and the next section answers short FAQs most beginners ask.
Mini-FAQ
How much of my bankroll should I risk per trade?
Most beginners do best with 0.5–2% per trade; 1% is a practical default for many, and lower if your strategy has highly variable outcomes—next question covers sequence risk and compounding.
Should I use Kelly from day one?
No. Kelly needs a reliable edge estimate and stable payoff ratios; start with fixed fraction and consider partial-Kelly only after you have verified edge over many trades, and the final FAQ addresses where to learn more.
How do I handle leverage and margin calls?
Keep leverage moderate, monitor margin utilization daily, and size trades so that a single stop does not trigger a margin call; if unsure, reduce stake or use brokers with clearer margin reporting.
18+. Spread betting carries risk of loss and is not suitable for everyone; never bet money you can’t afford to lose and use self-exclusion or cooling-off tools if gambling becomes harmful. For local Australian KYC/AML and tax rules, consult an adviser, and the next paragraph gives a short author note and sources.
Sources & Further Reading
Practical experience, platform fee sheets, and basic probability texts inform this guide—if you want platform-level cost comparisons and payments insight, reviews at thisisvegass.com can be a starting point for comparing spreads, fees, and withdrawal timelines; next is the author note so you know who wrote this and why you can trust it.
About the Author
Written by a trader and risk manager based in AU with years of retail trading and coaching experience; this guide aims to be tactical and usable, not theoretical. If you’d like a printable checklist or a simple stake calculator template, reach out via my site or broker support—this is the end of the guide and the start of your disciplined approach to spread betting.