Spread Betting Markets - What to Spread Bet On
The purpose of this section of our tutorial is to look at spread betting 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 investment strategy. Whether you’re considering spread betting as a standalone trading activity, or you have your figurative finger in many different trading pies, understanding the interplay between spread betting and alternative types of investment, and how this applies to practical trading scenarios gives you the best idea of how you can begin to develop an effective trading approach.
Financial 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. Please keep in mind that different financial spread betting providers offer different markets and spreads and you have to make sure you check with you brokers on what instruments are available to you (usually you have over 5,000 instruments to choose from and it's more than enough for majority of spread bettors).
Markets to Spread Bet On:
- Indices - this is the most common market for the spread bettors and all the brokers offer a wide range of indices to spread bet on (e.g. FTSE100, Nikkei, S&P500, DAX, etc.).
- Currencies - there has been a phenomenal growth in the number of forex traders and now all the spread betting firms offer a wide range of forex bets (e.g. USD/JPY, GBP/USD, GBP/EUR, etc.).
- Commodities - financial spread betting started with gold trading and now spread betting companies offer a wide range of commodities to trade (e.g. precious metals, oil, crops, livestock, etc.).
- Equities - most spread betting brokers offer a range of stocks to choose from and it's vital that you check with your brokers on what is available.
- Options - even though some providers allow you to bet on options (call or put), they should only be used by experienced traders.
- Futures - if you're looking to trade futures you have to make sure you understand how futures markets work (visit ftacademy.com to learn more about futures) and what product you'd like to trade.
The concept of spread betting, including analysis of the more details aspects of markets and leverage, can at times seem abstract and academic, and there are volumes of writing from both traders and scholars alike on the finer points of trading theory. When it comes to practically understanding how to spread bet, however, a more pragmatic approach to spread betting in practice is needed to demonstrate when and how financial spread betting can be used, and the best practice methods for implementing financial spread betting as part of your trading portfolio.