Once you’re ready to get started with spread betting online, you will need to adopt a winning strategy. Follow these tips for a successful spread betting career.
Top 5 Strategies for Successful Spread Betting Online
- Like anything that involves strategy, Planning is required. Before you attempt to engage in financial spread betting, be sure that you have conducted due diligence on your tradable asset. There are plenty of things you can do like: Watching the news, following live updates, gauging market sentiment, checking financial reports, following economic announcements, and the like. These factors have important effects on tradable assets, and they will assist you when you engage in financial spread betting. Not every bit of data is relevant, but those that are can have a marked effect on the outcome of your trade. Knowledge is power.
- Signals give you direction regarding spread betting trades. Are you going to go long, or short? Watch the market signals by following trends and patterns on charts. There will be important support and resistance levels indicated. Various other measures to look out for include the MACD (Moving Average Convergence Divergence), Stochastic Measures, RSI (Relative Strength Index) and others. Gain a basic understanding of these measures so that you can better anticipate market movements.
- Before you get started with any financial spread betting activity online, it is a good idea to practice first. While it may not always be possible to use a demo account at a spread betting company, you can conduct a ‘faux trade’ by selecting a currency pair, indices, stock or commodity and following it from inception to conclusion. This way you don’t risk losing any real money on your trade. By doing this a few times, you’ll start to get the hang of spread betting. This strategy is often called Paper Trading. Once you feel confident about your practice-money trades, you can step it up a gear and start to trade for real money.
- Something that very few novice traders do, but which is highly imperative, is Defining the Reason for your Trade. Before you place a spread betting trade, jot down the reason why you believe that trade is good in the first place. Perhaps you spotted an opportunity in the markets, and you believe that the underlying instrument will move in a certain direction – that’s a good reason to open a position with financial spread betting. You may have to tinker with your strategy a little, to fine-tune it. Now that you have a strategy, it is essential that you place a stop loss at the right price point. This prevents you from losing too much. Another thing that you can do is have a take profit point, because greed invariably leads to sharp losses. Ideally, your stop loss point should be as close as possible to your entry price.
- The most important point to remember with financial spread betting is the use of Limit Orders. Limit orders are important in that they can help you to secure profits by closing out a winning trade once the market reaches a specific value that you have set in advance. You can do this at certain points in the day – the early morning or the evening – in anticipation of a day of trading. That way, you will be able to hit your profit points without having to sit in front of a computer screen all day long. You certainly don’t want to miss out on any potential trade because you are unavailable to take action. If for example you have taken a position on the FTSE 100 index at 2,000. Let’s say that the FTSE 100 index moves to 2,300 and the price is £3 per point. That means if you close out the position by using a limit order at 2,300, you will have generated £900 in profit.
Author’s Bio: Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes his vast expertise to spread betting broker comparison website, spreadbettingreview.co.uk.