Day Spread Bet Trader Profile - How Day Traders Make Money
Day spread betting is a common type of spread trading, often naturally assumed to be an easier proposition than longer-term strategies because of the shorter time frame in which opportunities (and risks) are allowed to develop. Trading through the course of the day, sometimes considerably sooner, day spread bettors will look for quick profit opportunities, swings and market corrections in order to maximise their returns in the shortest period of time.
How They Trade
Day spread bet traders will look for opportunities over the ultra short-term. The idea is to find more frequent, less developed opportunities that can be aggregated in a lower risk, less research heavy way to generate a return on capital. This means keeping a close eye on the markets and how they behave in order to be in a position to react to trends and price bursts as they happen for maximum returns. While traders may hold positions overnight, the generate tendency for day traders is to cap trades at around the day mark, before new variables, market conditions and externalities arise and influence the market.
What They Trade
Day spread bettors are defined by the timeframe of their trading, and so for the most part day trade bets are more than sufficient. In fact, for many day traders and other ultra-short termists, even a day is too long a timeframe to allow positions to run for the strategy, so traders will find themselves quickly in and out over a short time frame where they fall into this category. Daily rolling bets, which carry over the turn of the trading day in as cost efficient a way as possible, are also used both throughout the trading day and for positions that mature slightly later in the day, to provide traders with a flexible tool for handling the market.
Day spread bettors are attracted to day trading because it is seen as being short term so low risk. With a position that's only open for the course of a couple of hours, there's only so far it can practically go wrong. Obviously there are no rules and nothing is fixed, but in broad terms trading over a shorter period of time reduces the market risk, i.e. the constant threat of market failure to your capital. At the same time, identifying opportunities for a profit over the course of a few hours or even right up to a full day is easier than projecting results over the medium and long-term, and as a consequence the research burden is not required to be as penetrating in each market to achieve the same results.
Trading over shorter market cycles isn't necessarily all it's cracked up to be, and there are two clear and major drawbacks to this type of trading outlook. Firstly, traders on the short-term don't have as much time to absorb risk, but these same restrictions apply on the profit side too. That means traders need to find more frequent successful positions, which technically makes the job harder than that of a trader looking for one or two larger trades. Similarly, greater frequency means the accompanying research burden can soon mount up, with traders constantly on the look out for new markets and new opportunities.