What and Where to Research
What To Research Before Placing a Spread Bet
Knowing what to research requires an understanding of the markets you are trading on, and how they respond to wider economic and political goings on. To start with, it’s a good idea to pull back for a second and consider why markets move in price in the way they do, and what this means for traders.
Say for example you are spread betting on the FTSE. If unemployment in the UK falls, it is likely that the FTSE will be buoyed as a result, and will possibly even show a rise in response to the announcement. This rise might be short-lived, or it might not materialise, but the theory behind this market movement is plausible because of the way the market is priced. If more people are in jobs, that means more people have a greater disposable income which in turn could lead to higher consumer spending and boost company profits, particularly in the retail sector.
This scenario may or may not occur as a result of a fall in unemployment depending on other factors (including whether the fall was expected, and the specific types of employment doing well), but for the purposes of the research question, you need to understand what kind of thing influences markets in order to give yourself the best possible chance of deciding how to respond.
Economic indicators are always a good way of judging future market movements, and you need to be constantly on top of what figures and reports are being published in the UK, the USA, Europe and possibly even Asia to give yourself a real broad base of knowledge. This doesn’t mean that you need to spend hours reading government reports and figures – simply catching the headline figure and maybe a couple of opinions about the figures should be enough to give you an idea of how things might play out on the markets.
Another key area you should be researching is the financial performance of companies on which you are trading, or the market climate for the particular commodity or asset you are hoping to spread bet on. Any data specific to the market, asset or instrument on which you intend to spread bet is an essential read as far as bolstering your knowledge is concerned, and it pays to make sure you keep on top of things in a general sense in order to give you a fighting chance of reacting to existing opportunities and identifying future ones as you progress through your spread betting career.
Where To Research Your Trades
Knowing what you’re looking for is one thing, but knowing where to find it is something quite different. The first port of call for most traders nowadays is the Internet, and for the purposes of your research the Internet will be an invaluable tool. The trouble lies in differentiating opinion from fact, and it is important to make sure that while you absorb both, you treat opinion with the credibility and weight it deserves – while not always the case, it could be argued that an opinion from a respected financial journalist with citations and structured arguments should be given more weight than an anonymous forum post.
The main stops for uncovering research and investment leads are news websites and other traditional mainstream media sources, investment blogs or columns and online forums. Essentially, you want to read as much commentary as you can, both formal and informal, to give yourself the best idea of what’s going on, and to get a feel for how the markets might be likely to respond to particular outcomes.
By being on top of you research and becoming a genuine expert in the financial markets (and in particular in the markets you trade), you can do yourself a real favour in making it easier to identify winning trades. A thorough, consistent research and knowledge plan starts to put you in the same league as successful traders in terms of investment intelligence, which paves the way for successful transacting over the long-term.