What To Look For Researching Spread Betting Positions
Researching spread betting positions is by some way the trickiest element to being a successful trader. Anything short of a well-researched, well-reasoned position is equivalent to gambling, and you can expect to lose more times than you win if gambling is your strategy. With research, the aim is to pinpoint earnings opportunities that the market doesn't seem to have spotted, and in doing so cash in while the rest of the world cottons on.
Fortunately, individual traders have the advantage of being a little more dynamic than many of their large, institutional competitors, and as such it is possible to get ahead of the curve and bag yourself some PIPs. However, the real challenge lies in knowing what to look for, and reacting on that information when you see potentially profitable conditions emerging.
One of the best ways to get on top of the markets, and one of the key areas in which spread bettors focus their attention is on market anomalies. Markets work to reflect the true value of an asset or instrument over time, and they behave in a cyclical fashion gravitating around a certain unspoken but agreed value for the market being traded. For example, a share might be seen to be worth around 100p, but might trade up on optimism to 105p and then down shortly afterwards to around 98p as investors buy and sell at the points they think represent maximum and minimum prices.
Where traders can profit is from perceived market anomalies, or periods where the market is either over or under priced from where it realistically should be. This can be practically monitored through the use of a number of different strategies and graphical analysis, identifying the resistance and support points of a share price to better identify profitable buy and sell levels.
Economic Indicators Yet To Be Priced
One of the biggest factors that drives market movements, no matter what's being traded, is economic indicators. Economic indicators are announcement and economic goings on that are announced on a daily basis of varying different types, which can lead markets to buy up or sell down depending on the nature of the indicator. For example, if oil prices starkly rise, airlines might see a fall in their value off the back of the news because they could face higher fuel costs.
Whenever an economic indicator is announced, the market will respond to that announcement if it has a bearing on their trading rationale. This provides dynamic traders with a short window of opportunity to capitalise on the announcement (and the gap between the actual indicator figures and what the markets had been expecting) to take their position in the relevant market. Getting it right, off the back of an economic indicator, has the potential to lead to significant returns, so traders are frequently concerned with economic goings on throughout the trading day.
Knowing what preludes a market movement in either direction is an important aspect of becoming a successful trader, and understanding the driving factors behind traders' decision making it the key to doing well over time. At any given time there are vast earnings to be made for the trader who understands how to forecast the markets, and by turning your attention to finding profitable market conditions like overpricing and surprise outcomes, you can trade successfully and lucratively through the spread betting markets.