- Follow the markets. A lot of people think that they can be successful at spread betting just on the back of a ‘hot trading tip’. This is serious business people, before you get started spread betting, you should start following the markets, getting an idea of how they react, what other experts say about them, and generally immerse yourself into the world of financial markets.
- Avoid Demo Accounts. Spread betting on a demo account is NOTHING like spread betting with your own money, no matter how good your imagination is. Also how realistic is it that you’ll start off with £10,000 in your spread betting account? Even if it is, it’s best to start slow on real markets. Avoid currencies and especially volatile markets initially just to build up your confidence. Then you can slowly raise your trading stakes as you gain confidence.
- Always Check Your Account Status. Spread betting is serious business. I know of some spread betters that don’t even bother checking their statements and rarely keep an eye on their open positions. Obviously this is pretty silly. Approach spread betting like a serious business venture and make sure you keep yourself informed.
- Be Disciplined. You have to have the discipline to keep an eye out for news, to check your account balance, your open positions, your margin calls and to make sure you’re consistently placing any stop or limit orders you need to. Again, spread betting is serious, treat it that way.
- Don’t Believe The Hype. Please, please, please don’t fall for ‘too good to be true’ seminars, webinars and information products that you have to PAY for. Almost every major spread betting provider offers FREE and quality seminars, just check their websites for this information.
5 Advanced Spread Betting Strategies
We cover some fundamental spread betting strategies above. However, here are some more advanced spread betting strategies you might find useful.
- Hedge Your Mortgage Rate. Most spread betting providers allow you to trade on interest rates. You can use this to your advantage in two ways. 1) If you have a mortgage and the interest rate is going up, you can use spread betting to ‘buy’ the interest rate effectively opening up the possibility of your making a profit on the rising interest rate. 2) If you have a lot of savings and the interest rate is falling (meaning lower returns from your savings) you can ‘sell’ the interest rate to open up the potentially of profiting from the falling interest rate. A word of caution though, interest rates don’t tend to fluctuate that frequently and don’t really lend themselves to massive profit potentials.
- Profit From Falling House Prices. You can use spread betting to open up the potential to profit from falling house prices in two ways. 1) At least one spread betting company allows you to trade directly on a housing prices index so you can sell or buy this index to benefit from fluctuations in housing prices. 2) A lot more spread betting companies allow you to trade either on individual house building companies or on the sector of house building companies. This can be a good indirect way of profiting on falling/rising housing prices.
- Hedge Your Currency Holdings. If you’re like me you would have noticed that an average holiday in Europe has gotten a lot more expensive as the Euro has significantly strengthened against the pound over the last year or so. If you wanted to offset the impact of higher holiday costs, or the weakening of your pound in Europe, you could use spread betting to ‘buy’ the Euro.
- Hedge Your Existing Share Portfolio. In these turbulent times, lots of shares are taking a hit. Instead of relinquishing your long term share holdings. You can use spread betting to hedge these shares to offset falling share prices. If there is a danger of a scheduled event like a corporate earnings update disappointing market expectations, then spreadbets can be used to take a short position ahead of the event. If there is a subsequent sell-off in stocks, then at least the trader or investor can recoup some of their portfolio losses through a short spreadbet.You can even use spread betting to profit on rising share prices without having to sell your actual share holdings.
- Offset Rising Petrol Prices. Use spread betting to offset rising petrol prices at the pump. You can do this in two ways. 1) Buy oil. You can use spread betting to trade on commodities like oil (both Brent and Nymex). 2) Buy oil companies. Share in the profits that oil giants are making with higher fuel prices and rising share values by using spread betting to ‘buy’ these shares.