Spread Betting is a simple, yet powerful way to trade the financial markets and offers you plenty of trading opportunities. You’ll have a wide variety of markets to choose from and can trade 24 hours a day on global markets.
It is very important that you understand exactly how to open your first Spread Betting position and exactly which options are available to you, as well as how to ensure the risk level you choose is right for your chosen strategy.
Our guide to Spread Betting will help you choose the right market for you, teach you how to identify the right time to enter the market and cover the tools available to you to help ensure you manage your risk responsibly.
As part of your trading plan you should have a profit target in mind as well as a firm point at which you will cut any potential losses.
Get started with Spread Betting
- Choosing the right market - When you trade with ETX you’ll be able to Spread bet on a wide range of markets from around the world. Like with any form of investment, it is important that you research the market you want to trade and that you have an understanding of both current sentiment, as well as the issues and events that drive price movements within your chosen market.
- Selecting a stake size - Once you know which market you want to Spread bet on you’ll need to decide how big a stake you are willing to risk with your position. Remember, Spread Betting markets are priced in points, so you will win a multiple of your stake for every point the market moves in the direction you predict. Conversely should the market move against you, you will lose multiples of your stake for each point the market moves in the opposite direction. When choosing a stake size, it is important that you don’t overleverage yourself, you should always have sufficient margin in your account to cover your positions.
- Decide which direction to trade in - No matter which market you decide to open a position on, you’ll need to know whether you want to open a Buy (long) or Sell (short) position on the market. To help you decide this, you’ll need to research and analyse the market you’ve chosen. Make sure you have a strong feel for current market trends and sentiment as well as the long-term direction of the market. Knowing an estimated timeframe for your position before you place your trade is important as this will determine whether your goals are short, medium or long term.
- Managing your risk - When you Spread bet, you are trading on leverage and while this can magnify your profits, it can also increase potential losses. This is why it is important to put in place a strong risk management strategy to help you set a level of risk that you feel comfortable with. When you Spread Bet on our TraderPro platform, you’ll have access to powerful risk management tools to help protect you against market volatility.
- Monitoring your trade and exiting the market - Once your position is open, it is important that you monitor both your trade as well as current market conditions. With our cutting-edge mobile apps for iOS and Android you can track market movements on the go, whenever and wherever you want so you’ll never miss a trading opportunity and you’re always in control. Ensure that you monitor data releases, market news and macro analysis to stay up to date with potential market movements. You can also use our advanced indicators and drawing tools to define resistance and support levels that could help you identify the most profitable time to exit the market.
How to decide on the right Spread Betting market
When choosing the right market to Spread bet on it is important that you decide on an instrument that you already have some knowledge of.
This may be as part of your job, perhaps it is a market that has always interested you or maybe you have studied something similar at university.
Whichever market you choose, familiarity when you are starting out will help you to understand how and why the market moves. Knowing which factors can influence price movements and how to track changes in sentiment is important to a successful long-term trading strategy and will help you make better trading decisions.
At ETX you can choose from thousands of global markets across Forex, Indices, Shares, Commodities and Cryptocurrencies, so you have plenty of choice.
Selecting a stake size and deciding when to enter the market
Choosing a stake size is a crucial part in any trading decision and it is important that you are realistic with the amount you invest in each position. Stick to a trade size that is within your budget and ensure that you have margin to cover any changes in sentiment should the market move against you.
Because you are trading on leverage, the value of your position can change rapidly, especially in times of increased volatility. This means that you could profit quickly on a relatively short-term position, but remember that the opposite applies too and should the market move quickly against you, your losses will be magnified too.
Deciding when to enter the market is closely related to your trade size as well as your appetite for risk. You can determine the optimum entry point by using resistance and support levels to gauge market sentiment and range. A support level is a price level at which a falling market finds support and buyers, whereas a resistance level is the point at which a rising market tapers off and may not push higher.
You can use our pinpoint drawing tools and indicators on our powerful charts to define trends, support and resistance levels and chart patterns that may help you identify a change in market momentum and thus the ideal time to open a position.
Know when to Buy and when to Sell
Perhaps the most crucial part of any Spread Betting strategy is research and understanding the markets. Successful traders spend a great deal of time analysing their chosen markets to understand why prices change, which events and factors can increase volatility and which trends to look out for.
Your research will begin before you have opened your first position and one of the key questions you’ll need to ask is whether you want to open a Buy or Sell position. This will come down to whether you feel negative or positive about the future of the market you’re investing in.
Make sure that you do your research and analysis and gain a deep understanding for how the market you’re interested in operates. When you have identified your trading opportunity, commit to it and ensure you have sufficient risk management measures in place to protect against volatility.
Exiting the market at the right time is an art and your research will also guide you here in making your decision about when to close your position. As part of your trading plan you should have a profit target in mind as well as a firm point at which you will cut any potential losses.
Making your trade
Once you know which market you’d like to trade, and have established the direction you’d like to trade in, you’re ready to open your position. Our powerful TraderPro platform features an intuitive trade ticket to help you open your position quickly and easily. There are clear options to choose your stake size and you can attach powerful risk management orders to your trade by selecting the relevant boxes. You can also trade and manage your risk direct from any chart.
Monitoring and closing your trade
It is crucial that you monitor your trade once you have opened it and be alert to market movements and potential volatility. Set automated price alerts, stay on top of news and the latest analysis regarding your chosen market and be mindful of the profit targets and loss limits you have determined. Smart traders use our powerful iOS and Android apps to check their positions on the go, so they always know exactly where they stand and how well their position is performing. You can open a new trade, adjust your current position or limits and close a trade directly from our advanced apps, so you’re always in control.