Spread betting is an instrument which allows the trader to bet on the price fluctuations of various financial markets. The trader should keep a close watch on the price movements each and every movement. Spread betting guide is beneficial only when the risk involved with it is managed in a proper way.
Spread betting is a type of wagering where the outcome of the event depends on the accuracy of the wager. It is very similar to share trading wherein two prices are quoted, one is the buy price (bid price) and the sell price (ask price) and spread is the difference between these two prices. So it is imperative to learn a few spread betting strategies. It is a derivative instrument which allows the trader to trade on the price movements of various financial markets like indices, shares, currencies, commodities and the like.
Spread betting without a strategy is not a good betting thereby resulting into a sure shot loose. So, there has to be a spread betting strategy which should be developed according to the needs of the traders like the length of the trade, money management, entry and exit points and many more.
Some of the spread betting strategies are as follows:
Trend following: This is the most common method adopted by traders to determine the position entries. This is done with the help of various types of charts. When charts shown an uptrend means prices show higher highs and higher lows (higher peaks and troughs) this can be considered to be a clear indication of a "buy" position. On the other hand, if there is a downtrend means lower highs and lower lows, it can be considered to a "sell" position. Trend following is generally done on longer time frames on the basis of assumption that the trend is likely to continue in the same direction for long period of time. That is why this kind of trading
Reversal Trading: Reversal trading also known as contrarian trading is another most popular strategy adopted by many of the traders. It is opposite of trend following. Here traders look for prospective areas where trends are overextended and ready to reverse. These trends can be either up trends or downtrends. When an uptrend is about to complete to the upside means ready to turn low, traders enter into "sell" position and when a downtrend is about to complete means moving upwards, traders enter into "buy" position. Although in this stratagem it is difficult to predict the trends but it is frequently used method by traders as it leads to more favourable entry points and thereby leading to more profits to the traders.
Scalping: It is a spread betting strategy where the traders usually make profit on small price movements in a short period of time. The trader trades on current bid/offer price and as soon as the price moves in a positive direction the trader closes his position thereby earning profit.
Simple moving average strategy: when two moving averages crosses each other a buy or sell signal is given on the basis of which the trader places a buy or sell trade. This is an important spread betting strategy.
Range trading: According to this strategy, range is identified that is support and resistance levels which are of great significance in the market. When prices are heading towards support level the traders enter into long position and when prices are approaching towards resistance level the traders go for short position. The advantage of this method is, it allows the trader to place a stop loss which is placed outside of the trading range thereby preventing the trader from making heavy losses.
Breakout trading: In this type of strategy, support and resistance levels are identified with new highs and lows. As soon as the price breaks the resistance level, it is an indication for the trader that an uptrend is in place and the prices will continue to rise. Thus the trader enters into buy position. Conversely, when the prices breaks the support level there is a downtrend and prices have the tendency to fall thereby leading to entering into sell position.
News trading: This is usually done on the basis of interpretation of news and an in-depth knowledge of macro economic data.
These are some of the spread betting strategies which provides the spread betters to create an active market with different trading opportunities with an attempt to "buy high and sell low" resulting into making larger gains. One of the best systems around for binary options you can find here --> http://www.binarytradingsystem.net