How to Spread Bet
So we know the reasons investors from different backgrounds turn to spread betting in addition to (and sometimes in preference to) other trading styles and practices. But how do these people actually spread bet? What is the approach they use to identify profitable opportunities, and how do they conduct their trading activities to deliver a return on their investment?
Spread betting is conducted directly with a broker, and usually now takes place through a virtual interface, which will enable you to view your account data, size up positions before you invest and ultimately directly execute your trading decisions. From there, it’s a case of buying and selling positions to open and close your exposure to a particular market, and all fees and costs are covered automatically from your trading profits. Process-wise, actually trading is the easy bit – the real difficulties lie in identifying what the right markets and the right times to get involved in a particular position, and that depends to a large extent on having a number of tools at your disposal.
The act of spread betting in terms of purely executing trades is fairly straightforward once you’ve got the right tools in place to make sensible trading decisions. Aside from an account with a spread betting broker, which is arguably the most basic of tools for executing spread betting transactions, you also need as an essential part of your trading equipment access to the financial media throughout the day, and an organized approach to following current affairs and anticipating market reactions to future events.
It’s vital that you are in a position to act quickly in order to make the most of different outcomes, and that means keeping on top of what’s going on in the world and the markets around you. Gleaming information from current affairs is the lifeblood of financial trading, and it can be of critical important to your spread betting success. That means keeping a close eye on online media, including blogs and forums, as well as TV and print press so you understand exactly what’s going on, and what’s likely to impact the prices of the markets in which you deal.
It is also advisable that you find a charting package that works for you in order to give you the best chance of identifying price trends and future movements. Technical analysis tools form the staple of any spread betting toolkit, and while there will probably be some degree of analysis afforded by your trading platform, it might be worthwhile to invest in other tools which enable you to determine and analyse price data and make future investment decisions on that basis.
Spread betting is a low-barrier-to-entry way of dealing in the financial markets, and you can get started with little capital, tools or experience provided you have a sound grasp of the basic fundamentals. One of the most underestimated yet crucial of these fundamentals is knowledge, and the ability to research positions thoroughly before investing. It is this process of knowledge and research than differentiates successful traders from the field, and makes spread betting a trading vehicle with real potential.