Spread betting is extremely popular now: millions of people already use this method to earn real cash by betting on price movements. You don’t even have to buy or sell any assets, just guess correctly to receive your reward. However, this derivative is not that simple: you definitely need to understand the basics of trading and gain some experience. In this article, we explain how spread betting works, how to start using it to make money, and which basic strategies you can employ for your first bets.
How spread betting works
Spread betting is a way to place bets on all kinds of markets to earn by predicting price movements of different assets. You can speculate on Forex pairs, stocks, commodities, and many other assets, but you don’t have to buy or sell them this way. Just place a bet and wait for the outcome. If you are right, the broker will calculate your profits by multiplying your bet sum by the difference in pips. And if you are wrong, your losses will be calculated the same way.
A common spread bet has a duration of somewhere between a day and several months. However, it depends on the broker you use. Many brokers allow you to close your bets earlier or prolong them to capitalize on stable trends. However, it’s very important to have some strategy instead of simply using your intuition and relying on sheer luck. If you don’t have too much trading experience, you can take a common betting strategy and master it. Here’s the list of the most common strategies for novices.
Trading with MAs
Trading with the use of moving averages is pretty simple even for beginners. MA allows you to get rid of market noise to understand the trend’s direction. The easiest way to use this indicator is to look at the two of them: one for the short term, and another for the long term. When they cross, it may be a sign of trend reversal.
This strategy is based on spotting common patterns in price movements. It relies heavily on technical analysis, but you can start by learning how to identify the most usual patterns and betting accordingly.
On the contrary, this strategy is mostly based on fundamental analysis of all the factors affecting the current price of a certain asset. This way, you place your bets before major news releases hoping it will change the price in the direction you expect it to move.