Spread betting provides an easy way of profiting from the movement of prices of thousands of markets that include shares, indices and currencies. The possible returns are much higher than traditional brokering accounts for what you basically need is just a small margin deposit to support the positions and the rest resulting profit will be free of tax.
Let us examine the special elements and key steps to be effective in spread betting. We begin by taking a look at how it generally works in collaboration with different services before moving forward with effective risk management schemes. The next stage is geared towards using charts and market analysis to identify opportunities before assessing the available technological advantages through mobile trading platforms before tackling the best educational resources.
1. How spread betting generally works?
Spread betting accounts allow traders to trade in multiple markets which basically means that you can take full advantage of the opportunities whenever it presents itself. A lot of these areas would otherwise be difficult to access to private investors. There is also the added perk that all gains will be relatively tax-free.
Comparing various services
The way in which spread betting providers make a lot of money is thru the difference between purchases and sales which is coined as spread. Whenever a position is opened and closed, traders are required to cross the spread and this is representative of the main cost of the trade. Spreads on the more popular indices such as the Dow Jones and the FTSE 100 tend to begin at an advantageous point, however they are normally more like four points even when they underlying stock market are closed.
2. Searching for great opportunities on the charts
One of the most widely accepted ways of identifying potential good trades is taking a good look at charts. These can highlight the main profitable trends and key resistance and support levels as well as several other potential good price patterns. These data can provide traders helpful insights in making sound decisions by giving them a benchmark on the market is likely to move.
Automating the trading process
The benefit of using automatic trading platforms such as the Advantage Trader platform from City Index is one of the most advance trading interface that includes fully customizable charts with tons of drawing features and variable alert ping features. There are well over 100 built-in trading strategies that can be available for use to automatically trade the markets which you can also personalise.
3. Effective risk management strategy
The risk of having too big of an exposure relative to the cash in your respective accounts is an adverse move that could evidently obliterate your existing unallocated funds. Some providers would have an automatic system that would close your positions if this situation ever happens. It is much better to keep adequate free cash in your account to cover any unforeseeable losses as to avoid being prematurely closed out. Moreover, never risk more than 5 % of your trading capital on a single trade and always diversify positions in the similar approach as you would in an investment portfolio.
Planning your trades
To have consistency in gaining profits from the markets, you need to plan your trades ahead of time. This requires smart and objective approach on where you are clear about why you have opened the position by knowing where you plan to take profits and at which point you intend to close before incurring heavy losses.
Using Stop Losses
All professional traders who are actively engaged in the industry will always advise novice traders that the surest and safest way in limiting severe losses is using stop losses. These are basically standing orders that will automatically close a position if the price move against your trade and hit a certain predefined limit. Moreover, you can also set limit order to take profits in a similar way.
4. Identifying trades using market analysis
Another widely accepted way of being able to identify trades is looking at market analysis. An important economic announcement regarding a specific company can often result in major shifts in price movement. As a result several large spread betting companies include live news feed on their platforms and many publish key analysis of profitable items.
Understanding Client Sentiment
One of the most novel ways of analysing trades is the development of client sentiment indicators. This shows the proportion of clients in a particular market with long positions as well as short ones and the total number of trades involved in the same trading direction.
Utilising Social Media
Over the years the resiliency of the spread betting industry was able to adapt its services in connection of the importance of social media. Twitter, in particular is now an accepted tool of keeping clients updated with all the latest market trends and analysis.
5. Wide choice of educational resources
For those who are new to spread betting or those who want to improve their trading chances, there are plenty of educational resources that can greatly assist you. Most are only available to clients, but should you see something useful from another provider you might want to think about moving your account or opening another one alongside it.
6. Mobile Trading
Most spread betters want an easier access in monitoring their trade account on the go. It is particularly useful for those who are always mobile wherein with just the use of their tablets and smartphones, they can access current trends and activities on their positions. Moreover, the industry has developed a wide array of applications for various smartphones and tablets platforms that allow clients to trade in the same extensive range of markets.