Anyone who wishes to make a success of spread betting needs the right tools. It is like any other job; if you try to build a house without the right tools then something is likely to go wrong, and the same is true for spread betting. Let us briefly look at some of the tools that can aid spread betting investors.
If you have never tried your hand at either trading or spread betting, one option is to sign up for a demo account at one of the online spread betting companies.
Many spread betting firms offer such accounts for free and you will normally be able to trade exactly as if you were trading on the live platform; the only difference is that you will not be using real money.
You will be able to speculate on a variety of different trading instruments such as shares, currencies and commodities without any risk. This is a good way to explore new markets, study them and understand more about how they behave over time.
There is one aspect of a demo account which could add an element of risk: the fact that you are not trading with real money. As a result, some investors take more risks with their trades than when trading with real money. This can lead to bad trading habits or poor trading systems. Be aware of this difference if you start trading with actual money, or the market might teach you a couple of hard lessons very quickly.
Unless you are one of a handful of people in the world who can look at a spreadsheet filled with rows of numbers and percentages and make sense of it at a glance, you might find a good charting package useful. Fortunately most accounts come with exactly such a package. Experiment with the different time frames to find the one that suits your circumstances and your trading style. Many accounts offer live prices and provide a variety of charting options and technical indicators.
Some traders swear by candlestick charts; they do not even use moving averages or momentum indicators. Others prefer a complete system like the Ichimoku Kinko Hyo, which combines elements of various other indicators.
Depending on the time frame in which you decide to trade you will, to a greater or lesser extent, need newsfeeds about the shares, currencies or commodities you are trading.
There are many online sites providing up to date news feeds. Some of them are commercial, but you should also be able to find a decent free one. In fact some spread betting companies, like ETX Capitaland FinancialSpreads.com, provide their account holders live news feeds and a variety of daily articles and technical analysis.
Spread betting is a geared product, it involves a high degree of risk to your funds and you may lose more than your stake. Ensure that spread betting fits your trading objectives as it might not be suitable for all classes of investor. Before you trade, ensure that you are fully aware of the risk involved. You should only spread bet with capital that you can afford to lose. Where you feel it is appropriate seek independent financial advice.
A leading financial writer based in London’s financial heartland. Peter Jones is a seasoned commentator on the futures and financial spread betting markets.