How to profit from a 'split trade'

In spread betting, a 'split trade' gives a trader the opportunity to benefit from a move larger than the one originally targeted. Here's a good example.

In a previous post, I described a trade where I bet £2 on an outcome. I had a price target in mind, but wasn't sure if the market would carry on straight past it. I didn't want to give up on a big profit if the market decided to exceed my initial profit-taking point.

So here was my plan take the profit on the first £1 bet at my first target and let the other £1 ride. Meanwhile I would move my protective stop first to break-even, and then successively closer to the market. This is what I call a 'split trade'. It gives me the opportunity to benefit from a move larger than the one I had originally targeted.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.