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Spread betting companies back trend trading PDF Print E-mail
Written by Sam Coventry   
Monday, 12 September 2011 13:41

Spread betting companies IG Index and Capital Spreads back the 'trend trading' approach to spread betting.


Channel trading is an extension of 'trading with the trend' and can therefore be considered a sensible way to approach a market.

Because markets can tend to swing in similar ranges up and down using a channel can help estimate how far away a market could move from the trend can result in wise spread betting decisions.

IG Index back this spread betting strategy:

"It’s very useful for spread betting, as many clients aren’t just trying to jump in and out in the very short term for a few points every day, but are looking to run their trades for days and sometimes longer to capitalise on the trend.”

“Like any technique, there is no holy grail and it is not going to work all the time, but it has at its core the principle of trend following, that makes it worthy of consideration.” He is adamant that markets trend over all sorts of time frames, so trying to identify and follow these can stack the odds in your favour.

Spread betting company Capital Spreads also see advantages to trend trading.

Angus Campbell of London Capital Group notes that a classic trading channel formed in the FTSE 100 throughout 2011, until the break out to the downside in August.

Capital Spreads say, “this channel provided traders with fantastic opportunities to sell the highs and buy the lows, as the index continued to repeat itself by trading within the 5,800 and 6,100 trading range.”

IG Index notes that, over the last couple of weeks, sterling-dollar is a reasonable recent example of a channel.

Using a channel here would have helped identify the trend and help refine an entry point. Don’t let the perfect profit be the enemy of the good income.

“Channels are also useful,” says Campbell, “because they can signal a break out in either direction.” He notes a break out of a channel can often lead to a sharp move in the direction of the break out – as we saw this August with FTSE 100.

This is the time to get on the trend.
 

Some Spread Betting Wisdom



A great piece of advice for those looking to get stuck into spread betting. While most spread betting companies love to push their index offerings, most traders fail to make money off them....

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