How to Improve Your Financial Spread Betting Strategy

[sam harries]

Financial spread betting is becoming increasingly popular for individuals as it provides full access to the whole range financial markets at a fraction of the cost of the traditional ways of trading.

Financial spread betting is done on margin, that is, the individual can leverage profits much greater than the small initial outlay needed to place the bet in the first place. So, while profits can be substantial, so too can losses.

That explains why it's important to approach betting on the financial markets positively but with caution. And why you should work Celtabet on defining your base strategy right from the beginning. Every bet you make should involve various fundamental elements.

Market analysis

Whatever instrument you're going to place a spread bet on, be it a currency pair or a share, the first step is always the analysis. Whether you prefer technical or fundamental analysis it's only with experience that you will get to know how much data you'll need to analyse before you take a new position.

Bet planning and Calculating/Managing Risk

After identifying what market you're going to bet on the next thing to do is figure out how much you are going to stake, exactly what point you are going to place your bet and where the stop losses are going to go. Also, you want to be thinking about what you want the outcome to be and the risk/reward ratio.

As a general rule of thumb it's a good idea not to risk more than 3-5% of your total capital on any given trade. This number can vary depending on your appetite for risk, but it shouldn't significantly.

Executing the spread bet

Once you have your target, the entry point, your stake and where your stops are going to go you'll need to place your spread bet. You can do this by waiting for the market to reach your entry point or you can set up an order to open via the dealing platform to do this for you.

Managing the position

Once you have opened the position it's important to stick to your plan and not exit until you've achieved your objective. Clearly, if the market moves against you and you have a guaranteed stop then this will protect you from significant losses.

It's good to know when to re-position a stop and when not to in order for you to maximise your profit and not risk getting stopped out if the market moves against you for a short period of time only then to continue back on the desired path.