When money is in the line, it does take a little extra effort than knowing to have a better chance in the market. Spread betting has been one of the most rewarding investments for people interested in the finance market but needs to be combined with trading strategies to achieve a wholesome return. Over the years, traders have used different strategies to meet their goals. While the success of each strategy depends on the market conditions and your intuitiveness, there are some well researched and proven strategies that can help you tap the market. Here we present some of these basic strategies and how they can help you achieve financial gains.
Following the trend
Basically, it all comes down to how well you know the market and how accurately you can predict its performance. Following the market trend is also the easiest way to get into spread betting successfully and advisable, especially if you are a new player. Herein, traders try to understand the underlying momentum in share prices before working out the trading bias. Mostly, price activity is always in uptrend when both highs and lows are at their extremes. When these extremities become a trend over a time, it’s a bullish signal for establishing a buy position. Similarly, when lower highs and lower lows are the price graphs over a considerable period, the common assumption is that it will continue than reverse. Basically, once trends are in place, they are likely to continue over a long period, until something drastic affects the market.
Reversal trading is another commonly used strategy in spread betting. Herein, traders would be on the lookout for phases/periods where a trend has over-extended and is ready to reverse itself. Essentially, it about understanding buy entries when the downtrends show a reversal. Though new traders are automatically shy to try this strategy, reversal trading does offer some clean advantages. The only this is that reverse trends are hard to identify but allow for favorable entry points. Spotting reversals comes with practice, market research and having a professional financial management service provider like ETX Capital by your side.
This is one strategy that reverses the logic of following trends to place your spread bet. Herein, you will need to identify the resistance and support levels and position entries with the assumption that the market psychology will continue holding. Successful spread betting traders would buy positions when the prices are nearing the support level and conversely sell positions when it nears resistance. This strategy allows for stop loss placement and can be a great idea for new traders.
Now, here’s a good alternative to all the above methods. Breakout trading is a continuation strategy when the trader expects the prices to extend when there’s an uptrend and lower when there’s a downtrend. Breakout trading also involves identifying the support and resistance levels to trigger new positions. However, the only problem with this strategy is that traders might find it difficult to place stops and that the strategy actually requires buying high and selling low. In this strategy, its high volatility that helps reap greater profits.
Lastly, news trading strategy will depend heavily on macroeconomic data and how well you can interpret financial headlines. It’s a difficult job and requires a lot of experience in the market. However, given the fact that price activity is always affected by economic data releases in the form of news headlines, this strategy proves to be highly profitable. It is best to have someone guide you through the same and be a pro in the finance market.