To take advantage of tax-free profits from spread betting online, you will need a strategy in place. That will guarantee that you conduct your spread betting ventures in a risk-averse manner.
The purpose of this guide is to provide you with a list of the best spread betting strategies you should consider before risking your hard-earned money.
€ 1,000 (0.01 lots)
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
In This Guide
The following section will provide a detailed explanation of the best spread betting strategies. Furthermore, the following is a summary of each strategy that you may want to take into account.
Newbie traders should begin with a demo account facility as their best spread betting strategy. Using this method, you can spread bet to your heart’s content without risking a penny. The reason for this is that the best spread betting demo accounts allow you to trade in live market conditions – but with paper money instead of actual capital.
As an example of where you might find the best spread betting demo accounts, Pepperstone might be a good choice. Share spread betting is just one of many financial instruments. This FCA-regulated broker offers. After registering an account, you can begin using the spread betting demo facility.
You should only use a demo account to spread bets with stakes similar to your investment budget if you want to be on the safe side. So, for example, you do not need to use the demo account at stakes of £100 per point if you want to spread bet at an average stake of £1 per point.
Almost all of the best spread betting strategies will be based on technical analysis. To identify a potential trend, you will study historical price movements charts on an asset. Mastering this skill takes many years, as you can imagine.
That is why trading the financial news is one of the best spread betting strategies for beginners. You will look to take advantage of important economic developments reported by the mainstream media by placing spread bets.
These are a few examples of how this spread betting strategy might be applied in practice.
Example 1 – Going Long
Let’s say you’re looking at the spread betting market for the FTSE 100 index. According to the FTSE 100, it stands at 6,944 points at writing.
According to a recent report, the US economy is expected to grow by 2.9%
Initially, 2.2% was forecast
There is no doubt that this is good news for the economy, and thus – it will feed down to the FTSE 100 index.
Alternatively, you could visit your chosen spread betting broker and enter a long position on the FTSE
The FTSE will make you money if it goes up from its current price of 6,944 points
Example 2 – Going Short
Let’s assume you want to access the forex spread betting markets, which means you will trade currencies.
It is relatively straightforward to spread bet on the financial news, as you can see. As a result, it isn’t exceedingly difficult to determine whether a news story is positive or negative and determine how the market will react. When the market reacts negatively, you go short. When the market reacts positively, you go long.
Beginners often look for stocks nearing all-time highs when they are spread betting. Therefore, the stock is very close to its previous peak – if it breaches, it will be worth more than it has ever been.
Amazon is one of the best examples. Amazon’s stock price reached its all-time high of $3,531 in September 2020, as you can see from the chart below. The stocks, however, haven’t been able to break out of this level since then.
Amazon came close to completing the order several times but reverted each time. An experienced spread betting trader would have made money from this – since they would have short-sold the stocks as they approached the all-time high price.
Newbies should also consider trading signals as one of the best spread betting strategies. Essentially, you will sign up for a subscription service, where you will receive trading tips from the provider.
By following these guidelines, you’ll know what markets to access, how to enter the market, and at what price. As part of risk management, you will also be informed what stop-loss and take-profit orders to place.
For example:
Once you have the above information, you should contact your spread betting broker and place the suggested orders. Importantly, if you use a credible signal service with a history of successful trades, you can spread bet without any research or financial analysis.
You’ll need to learn about consolidation periods for this spread betting strategy. You will be performing your first technical analysis in depth. Among the easiest and most straightforward techniques to learn, this one is a very good choice for beginners.
An asset remains within a tight price range for an extended period during a consolidation period.
You should also place stop-loss orders above and below the upper and lower points of the range to trade risk-aversely. In this way, your capital is protected for the consolidation period’s eventual ‘break out.’
We examined some of the best spread betting strategies above from a fundamental and technical analysis perspective. First, however, we should make it clear that by truly mastering the art of technical analysis, you will be able to deploy a much greater number of strategies.
Technical indicators facilitate charting analysis, and there are over 100 of them. While some technical indicators focus on volatility and market depth, others focus on support and resistance levels.
Also included are price averages over the past 50, 100, and 200 days and volume and sentiment indicators. In order to make consistent profits from the spread betting markets, you should take the time to learn about technical analysis as soon as possible.
Before you can begin spreading betting online, you will need to open an account with a broker. A broker must hold a license with the FCA, support your preferred market, as well as low offer fees and commissions.
Below we have reviewed a small selection of top-rated spread betting trading platforms for your consideration.
Technical analysis is a great method for deploying the best spread betting strategies. Pepperstone is worth considering if you are familiar with pricing charts. You can trade CFDs and spread bets with this FCA-regulated broker across many asset classes – some without paying spreads.
When you sign up for a Peppersonte Razor Account, which works like an ECN account, that will be the case. As a result, you will pay a small commission of $3.50 per slide, but in return, you will get the best spreads available in the market. Pepeprstone allows you to place spread bets directly with market participants. Alternatively, you can choose the commission-free Standard Account, which has less competitive spreads.
Pepperstone offers a variety of financial markets on its spread betting platform. These include stocks, commodities, forex, and indices. Pepperstone does not have a minimum deposit and supports Paypal, debit/credit cards, and bank transfers. If you would like to trade through a third-party platform, Pepperstone is also a great alternative. MT4 (MT4), MT5 (MT5), and cTrader are all supported by the broker.
Pros:
Cons:
76.25% of retail investor accounts lose money when trading CFDs with this provider.
IG is a well-known and well-trusted online brokerage firm with many divisions in the investment industry. The category includes spread betting, CFDs, forex, traditional shares, and mutual funds. At IG, you have access to over 17,000 spread betting markets.
Investing is primarily in forex, indices, shares, and commodities, emphasizing forex. Every spread betting market offers long and short positions and leverage. You are limited to 1:30 if you are a retail client.
For professionals who open an IG account, the limits are much higher. That stands at over 1:222 when you consider spread betting on currency pairs, indices, and commodities. As IG provides Negative Balance Protection, you will never lose more than the amount of your balance when you enter a leveraged position.
Commission-free spread betting is available from IG. However, keep an eye on IG spreads since they are largely very competitive. For example, traders can trade indices and shares for 0.1 points, commodities for 0.3 points, and forex for 0.6 points.
If you believe IG can meet your spread betting needs, you can trade directly through their website. You can also download a mobile app for your iOS or Android device. There is a $250 minimum deposit for this spread betting platform.
Your Money Is At Risk.
After reading this Pepperstone review, you now know the platform’s key features and relevant aspects. The next step is to learn how to use it.
Creating an account on the Pepperstone app should take less than a minute, and the first step is to enter your account details. Next, click “Create Account” and enter your email address on the website. After that, you can sign up with Pepperstone through your existing Google, Facebook, or Apple account.
Pepperstone requires a deposit of at least $200 to open an account. Debit cards, credit cards, or wire transfers can be used to deposit funds. Click on ‘Fund my account’ to deposit funds
Pepperstone’s demo account is a good place to start for those brand new to spread betting and are interested in trying out a new strategy; Pepperstone’s demo account is a good place to start. You will be able to practice your strategy with no risk of depositing any money or risking any of it.
You will need to select a market to trade in before placing your first real-money spread betting order. Entering the name of the asset or market into the search box at the top of the page is the easiest way to do this.
If you believe the asset price will go up, you need to take either a long or a short position. Lastly, enter your stake per point and confirm your order.
Are you looking for some more spread betting tips before investing your hard-earned money? If this is the case, you’ll find several beginner-friendly strategies below.
To limit your potential losses when spread betting online, you should put a risk management trading plan in place. There are several ways to do this, including:
Set a limit on how much you will risk per bet. A good rule of thumb for newbie traders is never to risk more than 1% of their balance.
Always place a stop-loss order. If your spread betting position goes down by a specified amount, it will automatically close. As an example, if you are trading at $1 per point and want to limit your losses to $10, then set your stop-loss order at 10 points.
In addition, you should use take-profit orders, which will automatically close your trade when specified exit points are reached. You could, for example, set a profit target of 20 points on a particular trade.
You will avoid unpleasant levels of volatility when you trade blue-chip stocks, gold, or index funds. Market volatility is not conducive to beginning traders. Instead, if you stick to a high liquid asset, your potential profits and losses will remain relatively stable.
By trading only during the standard hours, you can avoid many of the risks associated with volatile markets. As a result, you shouldn’t trade before the markets open in the morning or after they close in the evening. The same goes for weekend trading.
There will be little liquidity outside of standard hours because some spread betting platforms offer 24/5 trading. As a result, asset prices will move more volatilely.
By putting in place some spread betting strategies, you’ll be able to target the financial markets in a risk-averse manner. Perhaps trading financial news would be a good place to start – an easy-to-implement strategy. After you have progressed through the learning journey, you will move on to more advanced strategies based on technical analysis.
To access the global markets, you will need to open an account with an FCA-regulated broker. However, there are thousands of markets on Pepperstone, making it a great option. Additionally, you can open a free demo account with the broker, and the minimum real-money deposit is just £20. Keep in mind that spread betting is illegal in the United States at the time of writing, so if you’re based in the United States and looking for tax-efficient trading, then a spread betting platform might be worth considering. However, since many spread betting companies in the UK do not allow US residents to open spread betting accounts, they can only trade Contract for Difference (CFDs).
It might be good to start with a strategy based on fundamental analysis. For example, when an important financial news story is released, you will open a spread betting position. After that, you might want to focus on technical indicators, such as the MACD (Moving Average Convergence Divergence), RSI, or Fibonacci Retracement.
Spread betting is not legal in the United States at the moment. Additionally, most spread betting companies in the United Kingdom generally do not allow US citizens to open spread betting accounts, though they may offer contracts for difference (or CFDs).
A risk-free demo account is the best way to practice spread betting strategies. Pepperstone is a popular spread betting site where you can find this.
It would help if you predicted a short-term asset's value to place a spread bet. For example, you would place a long order if gold is priced at $1800, and you believe it will rise. You will make money if the price of gold rises above your entry price.
There is a risk associated with every trading market. However, by deploying sensible stop-loss orders, you can reduce these risks. In addition, you can also minimize these risks by hedging when economic uncertainty is present.
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