How To Pick a Spread Bet

this post answers the following questions
1. How to pick a successful bet?
2. What are the great possibilities in winning a spread bet?
3. What is the role of technical analysis in spread betting?
4. What is the role of technical analysts in spread betting?
5. How can fundamental analysis help you pick a spread bet?

Despite the gloriously simple title of this article I am going to be honest that if I could provide the perfect answer to this I would be writing it from a beach in the Bahamas. Picking a spread bet is, of course, one of the easiest things in the world, it is literally a case of up or down in finance and more or less in sports spread betting. Picking a successful spread bet on the other hand is a different kind of activity requiring both a bit of understanding as well as a good strategy in order to successfully achieve this.

Personal Choice

I will try to cover the vast possibilities associated with picking a winning spread bet as succinctly as possible. Firstly, choosing a spread bet is likely to be a very personal activity influenced by each trader’s personal preference in terms of markets, capital and general personality. It will also depend on whether a trader considers themselves to be a technical trader, who likes to use indicators and advisory signals and patterns to trade, or prefers to interpret fundamental elements such as news, politics and economic trends in order to make ‘up or down’ decisions. Neither of these is the wrong way to analyse spread betting but a general idea of how you will prefer to trade will help you develop a winning strategy.

Technical Analysis to Pick a Spread Bet

Technical analysts are the former group of traders who study price charts to find potential trading opportunities and they form the largest group of spread betters. Technical analysis can be a highly successful way to enter trades before and, like most great strategies, it attempts to allow you to place a correct (or highly likely) spread bet before the price or value actually changes. For this reason it is know as a pre-emptive way to trade, seeing a familiar price chart pattern or indicator signal that the price is about to go in a certain direction and jumping on before it (hopefully) rockets in that direction. The popularity of technical analysis is not only the accuracy of many of the ways that spread betters analyse opportunities using the technique but also the sheer number of ways in which it can be done.

Simple technical analysis in picking a high-probability spread bet (i.e. one which price is very likely to act as it is supposed to based on historic data) is to learn the most popular technical patterns and indicators there are and begin trading these. The most popular make up around a handful of the hundreds of setups available and they are often highly reliable for the following reason. Technical analysts focus on what has happened previously to determine what will happen in the future. When a familiar pattern appears and many thousands of bets are placed in the anticipated direction price begins to move, as if by magic, in that very direction. Nobody knows if it would have moved in that direction anyway but the sheer number of people who think it would has created a self-fulfilling element to technical trading. The expectation therefore influences the result and makes it a very good way to trade with the crowd.

Using Fundamental Analysis to Pick a Spread Bet

Picking spread bets using fundamental analysis is different to technical analysis as it requires a reasonable grasp of what makes the price move up or down. This includes the large, underlying economic forces which drive markets in the longer-term such as interest rates, unemployment figures and GDP data. Although these subjects may seem rather boring at first, they provide fascinating and highly profitable information in to the general trend of every financial market. Fundamental traders are often longer-term traders making large amounts of money over a long period of time and use the connections between, say, interest rates and currency values to correctly spread bet on the direction of value of currency pairs. Short term fundamental spread bets can be successfully employed on, for example, the non-farm payroll figures of the US each month which have a tendency to send markets loopy.

Choosing whether to use technical or fundamental techniques to pick a spread bet is a personal, but potentially very rewarding decision available to all spread traders.

This article has been written by Tristan from http://spread.co.uk who wants to help you pick the best spread bets possible.

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