The purpose of this section is to look at how spread betting works in practice across a number of key market types, to give a better flavour of how you can start to use spread betting as part of your trading strategy.
Spread betting offers a wide range of markets to choose from. Even though some spread bettors stick to just a few markets, it’s sensible to look at a wide range of instruments and products. Keep in mind that different spread betting companies offer different markets and spreads and you have to make sure your broker of choice actually offers the instruments you want to trade.
Spread betting was initially devised and introduced as a vehicle for enabling individuals to trade gold without physically having to enter the gold market. Today, the choice for spread betting markets has been opened up significantly, to take in a broad range of commodities, assets, options, indices, and more. While the range of markets offered can vary, they can be broadly classified into six main categories.
A Wide Range of Markets to Spread Bet on
Forex
Market
Forex Spread Betting
Shares
Market
Shares Spread Betting
Indices
Market
Indices Spread Betting
Some brokers will offer spread betting on options, interest rates, bonds, ETFs, currency baskets and even sports.
A few brokers also offer sectors spread bets.
Specialise in your Chosen Markets
Financial spread betting requires an attention to detail, and an understanding of the goings on in and around core markets. Without keeping a finger on the pulse through ongoing research efforts and market analysis, traders will find it hard to consistently identify profitable trading opportunities and walk away with a profit. Particularly in volatile markets, knowing your onions is a prerequisite to achieving lasting, sustainable success.
This means as a spread bettor, it’s down to you to step up to the plate and live up to the challenges of successful trading by engaging in researching and reading to make sure you’re always on top of the market mood. Unfortunately, there can be no substitute for hard work, and for getting truly stuck in to markets and current affairs, and depending on the size of your portfolio and the number of markets you trade across, the burden can easily become unmanageable.
Be Selective over the Range of Markets
One of the ways to lighten the load of research, and to enable more specialisation in particular markets is to be selective over the range of markets you want to spread bet on, and deliberately filtering opportunities to allow for greater insights and market understandings to be developed. While limiting the scope of opportunity might seem counter-intuitive to some, focusing efforts on a few key markets can deliver a range of trading advantages.
Firstly, a lower research burden means you can spend more time trading and less time reading, which feels generally like a better use of time. In fact, by virtue of freeing up the need to research other markets and opportunities, traders can devote more time to drilling down into their preferred trading arenas and still reduce the overall time impact of their behind-the-scenes work. Being selective improves the efficiency of research, and possibly even the effectiveness of research in allowing traders more time to shape these crucial perceptions and judgements.
The ongoing management processes attached to monitoring positions becomes an easier contention when they are traded across limited markets. While diversification should always be encouraged as a general principle in broadening the risk management base, narrowing the focus to some degree in selecting markets means making decisions about positions over the course of the trading cycle is more likely to yield better results, as a result of more specialised, focused knowledge.
Markets and Opportunities
By paying attention to fewer markets, you can expect to be in a better position for identifying opportunities, as a result of familiarity and working exposure to the markets. More time to research and analyse different possibilities means by narrowing down your focus you can exploit more subtle opportunities in underlying markets, and leverage the gains to best effect. By going narrow and deep, albeit across potentially numerous positions, you can better refine your spread betting research and strategy efforts to improve returns.
Choosing preferred spread betting markets and choosing them carefully is a vital step in sharpening up your trading portfolio and delivering greater success. With familiarity and exposure comes a greater understanding of market moods, trends and tendencies, and this opens up an array of fresh opportunities to which traders would otherwise be blind. By focusing research and knowledge energies on a more select band of markets, spread betting capital can be best targeted to the most effective, return-efficient positions available.