Spread betting has been a common method used in the Foreign Exchange Market due to the need by traders to monitor the price movements in the market, commodities and Forex. Trading in foreign exchange markets requires a risk assessment type strategy in order to speculate on the price movements (both rising and falling) to avoid losses which could potentially exceed ones deposits. It is important to note the spread betting is illegal in the United States but still legal in a number of European countries including the United Kingdom thus leading to the development of trading strategies to ensure high profit potential while trading.
Five Simple Trading Strategies That Work
Structuring the Entry and Exit
This strategy entails the structuring of trades so that a profit-and-loss level is achieved. This strategy is helpful even when the odds are not in the individuals favor. The structuring of bets with favorable profit levels thus helps increase profits for the trader.
The premise of spread betting is usually the price moves of underlying assets. This may include the market index and active spread betters (like news traders) who are known to choose assets known to be highly sensitive to news items. The bets they choose are streamlined according to structured trading plans.
The Bottom line strategy
Traders need to gain sufficient information and market experience in order to know the best assets they can choose and the correct timing. This strategy thus helps mitigate loss by the traders.
Use of Arbitrage Opportunities
Illiquid instruments are known to be common with the arbitrage opportunities. The spread betters would in this case watch for pricing anomalies, then trading in a timely fashion.
Spread Betting Around Corporate Actions
Spread betting can also be triggered by corporate moves in some area situations. When a stock declares a dividend, then the dividend subsequently expires, betters take this timely opportunity to trade due to the fallen share price.
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