Spread betting is one of the emerging financial marketplaces which provides a great opportunity to those who want to try their hand at trading. Developed in the UK, the system allows for larger sums to be invested with the potential to earn higher returns. If you want to learn more, here are some easy tips on how to start trading spread betting today!
Register With A Brokerage
One of the most crucial steps to take before you begin investing in spread betting is to register with a brokerage. Like traditional stock brokers, spread betters will provide you with a platform to place and track your bets. However, unlike traditional stock brokers, spread betters will allow for larger sums to be invested with the potential to earn higher returns. So, make sure you register with a reputable brokerage such as MetaTrader 4 so that you can take advantage of all the features the platform has to offer.
Research The Markets Before You Trade
Having a basic understanding of the markets in which you plan on trading is crucial. This is especially important in spread betting because there are many different ways to make a profit from the system. To help you narrow down the possibilities, you should research the market before you start placing your bets. Fortunately, MetaTrader 4 provides many tools which can help you get a picture of the current market situation. In particular, the Analyze menu of the MT4 platform allows you to investigate the buying and selling volumes of all the stocks you are following. So, if you want to invest in airline stocks, for example, you can use the Analyze tool to look at the buying and selling volumes for all the major airlines.
Learn To Value Stocks Overnight
When you register with a brokerage, they will provide you with some free stocks to experiment with. One of the first lessons you will learn in spread betting is value investing; in other words, buying stocks at a discount to their fair market value. To value stocks overnight, you will use the Over-Night Value (ONV) calculation of the MT4 platform. This calculation will tell you what a stock is worth, based on the opening price and the closing price of the stock on the previous day. The more you know about valuing stocks, the better you will be able to determine whether or not a stock is a good buy.
Learn To Place Bets
Once you have registered with a brokerage and collected some free stocks, you can begin placing your bets. Just make sure to follow the given rules for each type of bet you decide to place. For example, you can’t short sell any stock in most countries including the US, so make sure you are aware of this fact before you begin placing your bets.
Build A Strategy
Once you have started placing your bets and seeing some success, it’s time to create a strategy. A strategy is simply a plan of action which you use to guide your trading. Every strategy has three basic parts: market analysis, setup and monitoring. The market analysis part examines the present situation of the markets you are watching. Setup determines how you intend to enter the market and when you expect to exit. Monitoring keeps you abreast of the current status of your portfolio, checking for levels of success and alerting you to any changes which may affect your trading. A great starting point for creating a strategy is the MT4 platform’s built-in Help menu. Search for ‘trading strategies’ and you will find an entire chapter which provides you with all the information you need to create your own strategies.
Learning how to trade spread betting is relatively easy. Once you have the knowledge and the basics down, all you need is the courage to put it into practice. Remember, however, that spread betting is a high-risk, low-reward activity, and you should only consider entering the market when you have deep enough pockets. Finally, make sure to follow the rules and regulations of the broker you are working with. Good luck out there.