For those involved, spread betting and CFD trading can be pretty hectic. You have to constantly keep with developments in share prices and reports on the performance of companies whose stock you’ve bet on. If you’re spread betting on the performance of an entire stock exchange like the FTSE 100 or the XETRA DAX, the value can change in a nanosecond. If you’ve got multiple bets on, then you’ve even more to focus on.
With all that to do, people engaged in both activities have their own strategies, some of which are more successful than others. It is common knowledge within the world of CFD trading and spread betting that there are traditionally three main trading styles. All of them, if utilised on the right market at the right time, can help you become a success, but what are they?
Day traders are people who open and close their bets on the same day. This style is suited to people who want to make quick gains on stocks, particularly if they make a big announcement on profits and the like early in the day. Day trading is ideal for those who have immediate access to share prices and can buy and sell shares online.
The potential for short-term gains can be great for day traders, but with it comes with risk. If your trade does not go the way you perceive, your bet could net you a loss, and so as such, it is important to consider risk management tools. To get into day trading, skill and discipline are needed.
This is the most common style of trading among spread betters who employ longer-term tactics. They spread bet on stocks over a period of days, weeks or even months, betting on a particular stock that they feel will go up or down gradually over a sustained period.
Position trading requires a detailed knowledge of the market you’re spread betting on. It also requires the trader to be patient, and to know when to stop before profits start to come down or when to cut their losses.
Swing traders occupy the hinterland between day trading and position trading. Swing trading involves betting on stocks from a couple of days to a few weeks and bets typically try to ride the wave of a price trend and spot trend reversals, which can be a little tricky.
Whatever style you decide to employ, there are resources available online to help you get the most out of it. For example, City Index offers are various tutorials and tips on spread betting to help you, should you choose to enter the world of trading.