Spread Betting Strategy.
There are many strategies that define how to trade forex but not many of those strategies include spread betting strategies which is the manipulation of your spread betting platforms to increase profit potential and limit losses. Different spread betting platforms have different features and methods of using their platforms so in this article I am going to outline a few strategies that I use with my particular spread betting platform.
Although as important as each other, it is important not to confuse spread betting strategy with trading strategy. Trading strategy is the implementation of technical and fundamental data to tell you when to enter and exit a trade. Spread betting strategy is how you are going to use your bet once in the trade to maximise the trades' financial effect. Spread betting strategy will include such decisions as to where you might put your stop loss.
It is recommended that you never trade without a stop loss or even enter a trade without one in place. The forex market is the most volatile in the world and can move 100's of pips quicker than you can close a trade. Once you have entered a trade it is the manipulation of the stop loss that is considered as good spread betting strategy. Once you have entered a trade using your trading strategy it is as important to have a spread betting strategy to run in your trading plan.
One of the most popular and limited risk methods of spread betting is to enter a trade and once 20 pips in profit move your stop loss up to your entry point as to eliminate risk. Sounds good in theory but as the market moves in waves the chances are you will be knocked out of your trade with zero profit the majority of the time. You can elaborate on this basic system by taking out 80% of your profit at 20 pips up and moving your stop loss up to your entry point that way you still have 80% of your profit on a reversal and if it keeps running you still have 20% on the trade.
A trailing stop loss is a stop loss that will follow the price up or down at the distance you set. This type of spread betting strategy is popular with longer term traders that often have stop losses in excess of 100 pips. I use a unique method of combining this strategy with the previous short term trade as to leave my 20% running into maximum long term trades with limited risk from my original trade.
Article Source: FxTradingStock.com
About the Author
Adam had been trading forex for years with little success. Adam, at first had no knowledge of the forex markets so he joined Colin Atkin's private members club. Colin is a professional trader who shares his trading live, all you have do is watch & copy what he does and take the profits. Since Adam joined Colin he has had the cash to invest in other business opportunities.
by: Adam Woods
Total views: 86
Word Count: 432
Date: Fri, 9 Apr 2010
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