Three spread betting strategy tips

published 23 July 2010

Novice spread betters are often advised to have a strategy. But what does that mean? Here are three tips that should help to boost your profits.

Stick to one product

Rather than treating spread betting as some sort of lucky dip, decide what you are going to focus on and stay with it. The most successful horse racing gamblers spend time getting to know riders, horses and track conditions. So should a budding spread better. For example you might select a currency pair such as AUS/USD. Fine get to know that market, learn about factors that influence the exchange rate. The more you know, the better your chances of winning. Don't forget you are up against some very experienced punters when you spread bet all the more reason to try and become one of them.

Only trade when conditions are right

Success in the forex market for example, is often about spotting an established trend and then getting on it early. So be patient. Never trade for the sake of trading. And definitely never have "one last punt" towards the end of the day simply because an earlier trade has lost you money.

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Don't trade when volatility is very high

If an index such as the FTSE 100 is bouncing all over the place you may think "great plenty of scope for profits there". But you shouldn't. The reality is you will probably be charged much greater levels of margin and get stopped out of trades, which racks up costs. Sure, any market can suffer from a "bolt from the blue" which is why you need stop losses. But avoid markets (the FTSE 100 has been a good example recently) where you cannot see any kind of pattern to prices.

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.