Spread betting, although considered as gambling by FSA is not entirely based on luck. There are people who are smart enough o make money through spread betting. They do so by repeatedly using certain strategies that others find hard to follow or comprehend. At the end of the day these strategies are more about discipline and keen observation rather than anything else. Having a solid strategy is quite important given that following the strategy that suits you with discipline and consistency is the key to profitability.
Scalping is one of the most popular strategies used by people who participate in spread betting. Scalping is for those traders who are risk averse and are much disciplined. In scalping, the financial spread is closed quickly between betting positions so that you make quick but small gains as the prices keep fluctuating all through the day.
Sometimes, the gains could seem quite small when you consider that the direction of the prices continues to a long extent and you missed making a big profit. On the other hand, scalping is safe and you are bound to almost always make small profits which will keep contributing to the pot of gains. For scalping you will have to be involved in the way markets are moving all through the day, which could be stressful.
Following the market trends
Another common strategy when you are going for spread betting is trading based on market trends. Spread bettors who follow market trends ride the wave of market movements which are triggered by a whole lot of market factors. This strategy is exactly opposite of scalping because in this case, you wait and sit over your position unlike quick market gains in scalping.
Your transactional cost is also reduced. This strategy is great during news stories or public announcements where there would be an initial volatility followed by significant gains for those who spotted the indicators early. This strategy allows spread bettors to benefit from a market reaction by identifying the potential in a situation slightly ahead of the others and reacting on it quickly.
Spread betting based on reversals
Many a times, there is a reversal in market trend, which would happen based on under-pricing or over pricing. Analyzing the prices in the market and through graphical information and moving averages predict the point where a reversal could happen will allow spread bettors to make a good money. For Financial spread betting on reversals you will have to be keenly observing the movement of the indices and then at the first indicator make a quick move before the rest of the people jump on it and there are price corrections.
This is a low risk strategy as you are waiting for something to happen and pounce on it only after the first indicator. So you don’t do anything ahead of time, which means you are cutting down on potential losses and yet are standing a true chance to make immense of the reversals in price movements as and when they finally happen.