Spread Betting Tips

Best Spread Bet Strategies

To succeed with spread betting, you must have a strategy for finding betting opportunities. The benefits of a strategy are that it allows you to eliminate variables and blindly jump on trades while allowing you to find profitable trades based on your rules consistently. There are many spread betting strategies, but below are some of the most popular types:

1. Breakout spread bet strategies

Breakout spread bet strategies is one of the top methods used by spread bettors thanks to its short-term, quick movement setups. Due to the surge in price direction and wide range of signals, breakouts make excellent day trading strategies.

The idea is to take advantage of strong price moves that happen when a forex pair breaks through support or resistance levels. Once a breakout happens, the price will likely continue in that direction, creating a solid window for profitable trades.

Breakout trading is a versatile strategy as you can use different methods for finding opportunities. These include:

• Support and resistance levels
• Chart patterns like wedges and triangles
• Trend line breakouts
• Technical indicators like moving averages and Ichimoku Kinko Hyo

How to Trade Breakouts Using Support and Resistance Levels

One of the most popular methods of finding breakout opportunities is by using support and resistance levels. Below, I’ll go through the steps on how to trade breakouts:

1. Find a key support level or resistance level, you can spot these by a series of similar highs (resistance) or lows (support) where price reacts the most.
2. Wait for the market to break above the resistance level (for a bullish breakout), or below the support level for a bearish breakout.
3. After the price has broken these key levels, look for validation with the price closing above the resistance level or below the support level.
4. Once validated, place your spread bet in the direction of the breakout to benefit from the momentum.
5. Add a stop-loss order to your bet, limiting potential losses if the market reverses.
6. The best place to take profit is at the next nearest key resistance or support level, as price tends to drift towards them after a breakout.

Reversal spread betting strategies

Reversal spread betting strategies look to enter the market at the start of a new trend, which makes them difficult to master.

Spread betting reversal patterns are a decent way of scalping, as you can use these methods to scalp range-bound markets, which is common on lower timeframes. An advantage of reversal spread betting strategies is how versatile the signals are; here is a list of common reversal methods.

• Chart patterns like head and shoulders, double tops, and bottoms are solid indicators for reversals and easy to identify.
• Price action patterns like dojis and hammer candlesticks highlight when a market is exhausted. This gives a strong signal that the market may reverse imminently.
• Technical indicators like moving average crossovers can show a market is reversing. This method is the easiest to spot, with its most common settings at 50 MA and 200 MA.

How To Spread Bet Reversal Signals Using Chart Patterns

There are hundreds of ways to identify potential reversals, but below I’ll share a quick and obvious method:

1. Scan for chart patterns like head and shoulders, double tops, or bottoms. These tend to form at the top or bottom of a trend, making them strong indicators for reversals.
2. Confirm the price is reversing by using the RSI, as this indicator will show you when the market strength is overbought/oversold. If double tops are forming when the RSI is overbought, this is a strong confluence for a reversal.
3. Wait until the reversal is confirmed by letting the price close below the chart pattern (if shorting) or above (if buying).
4. Open your spread bet after the confirmation of the reversal from the chart pattern, RSI, and price movement.
5. You can protect your position by using a stop-loss order should the market not reverse, but instead continues its trend. This way, your losses are minimised.

2. Scalping spread bet strategies

Scalping is an intraday trading strategy aiming to take 5-10 points from a trade, typically closing within seconds to a couple of minutes. These spread bet strategies thrive in markets that have high-liquidity and brokers with fast execution speeds.

The advantage of these types of strategies is that you get results fast, and there can be hundreds of opportunities daily. Alternatively, it’s an aggressive strategy where you have to take quick profits as one potential loss can wipe out 2-3 profitable trades.

There are many ways for scalping spread bet strategies to success, but the most common is through technical indicators.

For example, you can use Bollinger Bands to detect market squeezes, which create enough volatility for you to scalp the 5-10 points. This type of strategy is done on a low timeframe, typically 15 minutes at maximum, or tick charts for serious scalpers.

Spread Betting Advice

Spread betting can be a lucrative way to speculate on financial markets, but it also comes with significant risks. To increase your chances of success and minimise your potential losses, it’s important to follow some key spread betting tips.

1. Develop a Trading Plan

One of the most important things you can do to improve your chances of success in spread betting is to develop a solid trading plan. Your trading plan should outline your strategies for entering and exiting trades.

Spread betting can be a high-risk activity, and it’s important only to bet what you can afford to lose, so you must set your risk tolerance to help protect your funds. Set strict limits on the amount you’re willing to risk on each trade and stick to those limits no matter what.

You should develop a set of rules for entering and exiting trades based on your market analysis and overall trading strategy. For example, you may decide only to enter trades when certain technical indicators give a bullish signal, or you may have a rule always to use stop-loss orders to limit potential losses.

2. Focus on a Market To Bet On

Another key tip for successful spread betting is to focus on a specific market or set of markets. Trying to trade too many different markets at once can be overwhelming and lead to poor decision-making or chasing trades.

When choosing a market to focus on, consider factors such as your level of knowledge and experience, the volatility and liquidity of the market, and the potential for profitable trades. Many spread bettors choose to focus on forex markets, as they offer high liquidity and volatility and the ability to trade 24 hours a day, five days a week.

Once you’ve chosen a market to focus on, take the time to research and analyse it thoroughly while using an economic calendar to monitor data releases. Look for patterns and trends that could indicate potential trading opportunities and develop a deep understanding of the factors that drive price movements in that market.

3. Create A Risk Management Strategy

Risk management is perhaps the most important aspect of successful spread betting. No matter how good your trading strategy is, there will always be losing trades, and it’s crucial to have a plan in place to limit your potential losses.

One of the most effective risk management tools is the stop-loss order. A stop-loss order is a pending order to your broker to automatically close out your trade if the market moves against you by a certain amount. By using stop-loss orders, you can limit your potential losses on each trade and protect your overall trading capital.

Another crucial risk management practice is limiting your position size. You should base this on your total account balance to protect your capital. By betting smaller, more manageable amounts, you reduce the risk of wiping out your account. A common rule of thumb is to risk only 1-3% of your total account per spread bet. This approach means you’d need an incredibly unfortunate streak of 33 to 100 consecutive losses to deplete your account, assuming you have a solid strategy.

How do you get good at spread betting?

Becoming a successful spread bettor requires a combination of knowledge, skill, and discipline. Here are some tips to help you get good at spread betting:

Practice with a demo account

All UK spread betting platforms include a demo account that allowing you to practice trading with virtual money in a risk-free trading environment. Take advantage of these accounts to test your strategies and get comfortable with the trading platform before risking real money.

Start small

When starting out, it’s important to keep your bets small and focus on building your skills and confidence. Don’t risk more than you can afford to lose, and avoid the temptation to chase losses or double down on losing trades.

Keep a trading journal

Keeping a detailed record of your trades can help you identify patterns and improve your performance over time, this is something that transformed my trading. Note down the details of each trade, including the market, entry and exit points, and the outcome. Review your journal regularly to identify areas for improvement and refine your trading strategy.

Stay disciplined

Successful spread betting requires a high degree of discipline and emotional control. Avoid letting your emotions guide your trading decisions, and stick to your trading plan even when things aren’t going your way. Don’t chase losses or take excessive risks in an attempt to make up for previous losses.

How to win a spread bet?

Winning a spread bet requires a combination of skill, knowledge, and discipline. Here are some tips to help you increase your chances of success:

• Do your research: Before placing a spread bet, make sure you have a thorough understanding of the market you’re trading and the factors that drive price movements. Use fundamental and technical analysis to identify potential trading opportunities and assess the risks involved.
• Manage your risk: Spread betting can be a high-risk activity, and managing your risk carefully is important. Only bet what you can afford to lose, and avoid the temptation to chase losses or double down on losing trades. Use proper position sizing and diversify your trades across multiple markets to spread your risk.
• Be patient: Successful spread betting often requires patience and discipline. Don’t feel pressured to make trades just for the sake of being active in the market. Wait for high-quality trading opportunities that align with your strategy, and be willing to hold onto profitable trades for as long as necessary.

What are the best practices for managing risk in financial spread betting?

Managing risk is crucial for success in financial spread betting. Here are some best practices to help you minimise your potential losses:

• Set stop-loss orders to limit potential losses
• Use take-profit orders to secure gains
• Only risk a small percentage of your capital per trade
• Stay informed about market news and trends
• Practice with a demo account before using real money
• Develop and stick to a trading plan
• Never bet more than you can afford to lose

What are the best indicators for successful spread betting on financial markets?

Spread bettors use many different indicators to analyse financial markets to help find new trading ideas. Here are some of the most popular and effective indicators:

It’s important to note that no single indicator is perfect, and it’s often best to use a combination of indicators to confirm trading signals. Additionally, it’s crucial to backtest any indicators or strategies on a demo account for forward testing or historical data for backtesting before using them in live trading.

FAQs

What is spread betting in forex?

Spread betting in forex involves speculating on currency pairs’ price movements without owning the underlying currencies. You place a bet on whether you think the market price of a currency pair will rise or fall, and your profit or loss is determined by the size of your bet and the actual price movement.

How can I trade on a Forex spread betting platform?

To trade on a forex spread betting platform, you must open an account with a spread betting provider. Look for a reputable provider with competitive spreads, a user-friendly platform, and robust risk management tools. Once your account is set up, you can choose the currency pairs you want to trade, decide on your trade size and direction, and place your bets using the desktop or spread betting app interface.

Best Spread Betting Strategy For Beginners

For beginner bettors, a simple and effective spread betting strategy focuses on trending markets and uses a combination of technical indicators, such as moving averages and RSI, to identify potential entry and exit points. It’s also important to start with small bet sizes, use stop-loss orders to limit potential losses, and never risk more than you can afford to lose. As you gain experience and confidence, you can gradually expand your strategies and risk exposure.

Is spread betting profitable?

Spread betting can be profitable, and many bettors use this method of speculating to grow their capital. Consistently profitable spread bettors typically have a deep understanding of the markets, a well-defined strategy, and disciplined risk management. Like any form of trading or investing, there are no guarantees of success, and it’s possible to lose money and make money. View our statistics page to get a better understanding of financial spread betting.

What is the formula for spread betting?

The formula for calculating the profit or loss from a spread bet depends on the trade’s specific details, including the bet’s size and the underlying asset’s price movement.

In general, the formula for calculating the profit or loss from a spread bet can be expressed as:

Profit/Loss = (Closing Price – Opening Price) x Stake Size

Where:

• Closing Price is the price of the asset when the bet is closed
• Opening Price is the price of the asset when the bet is opened
• Stake is the amount of money bet per point of movement in the asset price

Is Spread Betting Legal?

In England, spread betting is legal and regulated by the Financial Conduct Authority, headquartered in London (similar financial regulations as CFDs). The FCA has implemented rules for spread betting firms to protect retail investor accounts, such as segregating client accounts and following strict conduct standards. Spread betting is considered gambling for tax purposes, qualifying for exemption from capital gains tax, a benefit of spread betting over CFD trading. Learn more about the FCA on our regulation page.