Trading Systems

Trading Systems
Written by David

I’m bored of hearing the statistic that 90% of CFD and spread betting accounts lose money. Trading CFDs and spread betting is not difficult. They’re just instruments used to apply a trading strategy. The problem is the trading strategies/trading systems that are taught clearly don’t work. If they did then more than 10% of people would make money.

It doesn’t matter how long you have been spread betting, unless you have a spread trading system or trading plan, you will not make a consistent profit. But if you just go online and search for spread trading systems to buy, you will probably be disappointed.

The reason for this is that there are just too many scammers and others on the Internet looking for a quick profit, and seeing the trading niche as one that can be tapped into easily. The only reliable way to have a spread trading system that works for you is to make one.

One of the advantages to having a trading system is that you do not have to make decisions when you are in the bet, your system will tell you when to take and exit the bet. Even with a good trading plan, it can be hard to “pull the trigger” on such actions when you should. It becomes impossible to do so when you have money on the line if you are trying to spread bet without a plan.

 Trading Systems …. Are YOU flying by the seat of your pants when it comes to using a trading system ?

So many traders are entering the market without a plan of attack. They haven’t settled on one or two systems that can produce profitable results……instead they either use no system at all or they use four or five simultaneously …..ending in utter confusion.

Without a flight plan the YOU can’t get there from here !!

There’s a lot to be said about having a good solid trading plan and money management…….but equally so,
successful traders all use winning trading systems.

It should be one of the KEY weapons in any trader’s arsenal.

The decision to devise your own trading system should be based on how you comprehend or view the markets. Although we all hate to admit it…..we have this notion of latching on to the Holy Grail or one of these perfect trading systems. Obviously, we know that these perfect trading methods are just a dream, not a reality, but the concept and goals that drive the developers of future trading systems is too come as close to perfect as possible , in hopes of capturing those elusive profits.

Traditionally…… to be profitable, all systems must catch a trend in the direction of a long or short position. Furthermore, systems must have a method or technique of getting into and out of that long or short position.

In general, most systems use methods that can only have one of two types of entries. One is in the direction of the previous trend. In this case the entry is made on a breakout or on a moving average cross over. The second entry type is called anti trend. This is where entry is made at an extreme in price with the expectation of a reversal of a trend.

Therefore successful trading systems capitalize on these methods to produce the proper signals. To put it simply….. cutting edge systems know when the market is at an extreme (bottom or a top) or when the trend is going to continue. Finally, great systems have their own proprietary software that is unique only to that system.

It is not necessary to start with a clean sheet of paper when developing a system. You can draw on the expertise of others, looking at what they have put forward as appropriate signals and conditions for betting, and develop your own system from there. There are many resources freely available on the Internet, and others that are worth investing in, if you have confidence in the source as someone reliable and with experience.

The spread trading systems to be avoided include those that seem to hide behind catchy names, rather than letting you know wrote them; those that give you an anonymous contact e-mail address for any questions; those that make extravagant claims that are not substantiated; and those that simply give you signals without telling you why the bet was called. If you cannot see the logic behind the signal, then why would you trust your money to it?

There are other reasons to develop your own version of a spread trading system. If you try to adhere to the plan that someone else has prepared, and a few bets go against you, it is human nature to question whether the plan really does work in the long term. This can lead you to break away from the plan, and that puts you in the uncharted territory of trading with your gut, which, particularly in the early days, will tend to mislead you. Any plan can have several losses in a row, but if it is one that you have developed and tested, you are much more likely to stick with it, having seen the proof.

Beating the financial markets game is often not just one technique. There is not just one principle or method that makes a trader successful. Often you will get an edge with one method, or a bit more of an edge with another technique and you may very well profit. But specifically what you should be doing is taking advantage of everything you can to squeeze as much of an edge as possible. In other words, use each of the methods in combination with each other. The combined overall edge will determine your level of success.

The psychology of trading has been written about at length, but for the sake of this discussion you just have to realize that it is very difficult to stick with any plan when the going gets tough, no matter how disciplined you think you are. Do not trade for real with any method until you are first competent and successful in practice sessions. And when you start winning consistently, do not take it for granted.

Often when a person takes regular wins for granted and becomes ‘over-confident’, they eventually make costly and humbling mistakes. Although this is not always the case, keep in mind the saying ‘pride comes before the fall#. Keep your pride and emotions out of trading. By developing and working spread trading systems you will see your chances of coming out ahead will improve. However, do keep in mind that you’re learning a ‘business’ and it will require time and effort on your part.

The Holy Grail?

Many traders spent their lives trying to find the Holy Grail of trading. This is okay as long as they have a workable trading plan that they use while they search. Other traders have come to the realization that it does not exist, not just has not been discovered yet.

Some people approach contracts for difference in the same way. After all, they have been widely discussed as the best way of trading, for all the usually cited reasons of gearing and flexibility. The trouble is, that these traders are confusing an efficient trading tool with needing to do less work to make a profit.

No, switching from trading whatever you do now to trading spreadbets will not make your performance instantly better. If you don’t make a profit at the moment, you will continue to not make a profit. You just have to put together a better trading system!


Here’s one good rule of thumb on trading systems -:

  1. If it’s for sale on the internet it doesn’t work
  2. If it’s not for sale it may work

There’s a way to beat the system and win at financial spread betting! And that’s the system you develop to suit your personality! Financial spread betting and trading in general is hard.

There are many books and scam systems who offer the same – a system to help win financial spread bets, but most of these books tell you everything and tell you nothing at the same time. There’s only one way to win financial spread betting and increase your profit on the financial markets and that system is YOU!

Don’t be tempted with websites offering you the world in an eBook that has 100% tested systems to win spread betting with pictures of people who don’t even know that their picture appears on a website with fake statistics and fake checks.

About the author


I first cut my teeth in the Square Mile in the winter of 2002. I was young, fresh-faced and straight out of university; keen but maybe a little naïve about the way the investment world really worked… A few years ago I discover a whole new world of opportunity: spread betting on the financial markets.

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