5 Financial Spread Betting Strategies Used by Experienced Traders

Spread betting is a leveraged product. It moves fast and cuts deep. Profit is possible, but losses come just as quickly. Understanding market conditions is non-negotiable. If you can’t read price behavior, spread betting will punish you.

These techniques are primarily used by experienced spread bettors. Anyone without market experience should study them in simulation only and avoid applying them with real capital until they have a proven risk process.

The focus here is how advanced traders attempt to manage downside while working with leveraged products that can still produce losses.

5 financial spread betting strategies

The above example is a very basic example of financial spread betting. Understanding market conditions and execution pressure is mandatory before someone even considers whether spread betting is appropriate for them.

1. Scalping

Scalping, in short, is the process of quickly using trades to make small profits. It’s typically done by selling your spread position as soon as it becomes profitable, even if this means for a small amount of money. Scalping seeks small price moves, but poor timing can quickly turn them into losses due to spread and slippage.

Scalping prioritizes execution quality over the size of each outcome. The focus is on maintaining discipline, speed, and controlled losses. For most traders, scalping is difficult because constant decisions under pressure increase the likelihood of execution errors.

To use scalping in financial spread betting, you’ll need to be aware of some market indicators:

• Moving averages. These are technical tools that plot a market trend on a graph, showing whether it’s moving in a positive or negative direction. You use it to identify trends and suitable entry and exit points.
• Relative strength index. RSI is a measure of how strong or weak the market is based on its closing price. This helps you identify turning points and whether the market is being overbought or oversold.
• Moving average convergence divergence. MACD illustrates the strength, momentum, duration, and direction of a trend. Its two lines show whether prices trends are going up or down.

There are many other tools you can use for scalping, but start with these to build up your understanding. For a closer look at how to manage potential losses, check out this guide on leveraged trading losses.

Some other tips for scaling include:

1. Define exit levels before entering. Scalping breaks down without strict stops and pre-planned take-profit levels.
2. Selling short spread bets typically involves greater execution risk. Some traders avoid it until they have a proven risk record and can handle slippage under pressure.
3. Technical analysis is a must. Familiarize yourself with the tools, understand what they show, and what this means for you.

2. Breakout trading

Breakout trading in financial spread betting means opening a trade once your chosen asset reaches a previously limiting price level. Breakout trading anticipates continuation only after price confirms support or resistance has failed and holds beyond the level.

To breakout trade, you need to know support and resistance levels, which are:

• Support levels are also called “the floor”. This is the lower level of an asset’s price that, when reached, has a wealth of traders ready to buy because they see it as good value.
• Resistance levels are basically the opposite. Once an asset price reaches a set amount, it encounters resistance in trading that prevents it from going much higher. Limit orders will exist at the resistance level to reduce risk.

Finding a candidate for breakout trading of a financial spread involves some technical analysis – you can use RSI for this. Look for consistent resistance and support levels and, ideally, an asset that touches these often.

A good signal is to look at the trade’s price towards the end of the day. If it’s broken through the level and stayed above it, you’re likely looking at a breakout. Traders typically wait for a retest and confirmation before committing to a position. Allow it to test using its previously broken level, and be ready with your defined exit position.

Understanding how to use leverage in trading responsibly is crucial when placing breakout trades. Retail traders should familiarize themselves with negative balance protection to avoid losses exceeding their initial deposit.

3. Trend following

On paper, trend following in financial spread betting is straightforward: You identify a market or asset trend, assess its momentum, and use this to inform the position you place. Trend following assumes momentum may continue, but traders must constantly evaluate fading strength, reversals, and volatility shifts.

Again, you’ll need some technical analysis to achieve this. Moving averages are a good starting point, as you’ll be able to see general directions as well as highs and lows. You can also use RSI to find your entry and potential exit points.

To implement this strategy in financial spread betting, you’ll need a fairly decent understanding of the tools required. From there, it’s a case of deciding whether you’re trading on a long or short trend and following the data. Positions are usually closed when momentum weakens, volatility shifts, or pre-defined exit levels are hit—regardless of whether the outcome is profit or loss.

4. Range trading

Range trading can be seen as the opposite strategy of trend following. In financial spread betting, you’ll trade on both long and short positions at different times depending on the financial pair’s position within a set range.

Range strategies attempt to exploit repeated price bounces between support and resistance but fail when volatility expands or structure breaks. For this to be worthwhile, you want to identify an asset that has hit its support and resistance levels at least twice. This gives clearer historical context for potential entry and exit levels, although price can still break structure without warning.

For example, you identify a spread trade with fluctuations but steady sideways movement. You buy at the support level and then sell when it reaches its resistance level to make your profit.

You’ll want to use RSI to identify a financial asset that’s fluctuating nicely between its resistance and support levels without any signs of breakout. Longer-range charts can be helpful for this, as you’ll want clear evidence that the asset is fairly solid. From there, perform a deeper analysis to identify its levels.

5. News-based trading

This is perhaps one of the simplest strategies to explain, although it’s not necessarily less complex than the others. News-based trading essentially involves using situations outside of technical analysis or financial market conditions as the basis for the financial spread position you decide to open.

For example, say a FTSE company (in this case, an aviation services provider) makes the news for canceling hundreds of flights, leaving many passengers stranded. This is an unfavorable condition for the company and could be an ideal time to open a spread position on a decrease in stock price. Here, you’d buy stock and open a position on a significant fall. Once it reaches the desired level, you sell for profit.

Generally, news-based trading in financial spread betting is a short-term approach because the news cycle leads to large but short fluctuations in asset price. News-based setups create volatility, but price can reverse rapidly as information becomes fully priced into the market.

For those interested in news-based short-term trades, learning more about short selling with leverage can offer additional opportunities to profit from negative price movements.

There are two ways you can approach this strategy. The first is to know where to get your news. Identify sources that usually have first scoops on areas related to your chosen market. Set up alerts and try to take advantage of a trading position before the story hits mainstream news. Early positioning can improve entry quality, but it also increases the risk of trading incomplete or inaccurate information.

Some traders monitor scheduled events, such as earnings, budgets, or policy announcements, and plan for volatility spikes rather than direction.

How to match strategies with personal trading goals

The above strategies have different required experience and time commitments as well as barriers to entry. These should be the factors you consider when choosing which will work best for your goals and trading style.

Experience level

This seems like an obvious place to start. If you’re completely new to financial spread betting, consider something like scalping. It’s fast-paced, relatively low risk, and requires technical analysis tools. As such, it can teach you decent fundamentals for more complex strategies.

Alternatively, go for news-based trading. This requires a different approach but generally doesn’t involve technical tools. However, by extension, you won’t gain the kind of experience necessary to tackle the other strategies.

Time commitment

Scalping and breakout trading are fairly quick, whereas trend following and range trading require analysis and more time to execute. Even so, none of these strategies is super long-term. Rather, it’s more about the time you put into analyzing and opening your position.

Your goals

Are you prioritizing consistent execution, controlled loss sizing, or high-volatility trading opportunities? Do you have high or low risk tolerance? Do you want to learn the intricacies of trading, or is profit your main objective?

Whatever your goals, it’s worth thinking about how each strategy aligns with them. Risk varies widely depending on volatility, leverage, and how disciplined a trader is with exits.

Common pitfalls to avoid with spread betting strategies

Unsurprisingly, financial spread betting has the potential for high risk and big losses, especially for traders who don’t prepare properly. Make sure you consider the following pitfalls before picking your preferred strategy.

1. Lack of planning

This might be obvious, but address the following questions:

• Why are you trading? What do you plan to gain?
• What asset or market will you trade? Do you know anything about it?
• Can you afford to lose?

These questions, more than anything, will help you assess risk. For example, if you don’t know whether you can afford to lose, what’s stopping you from making a leveraged trade worth thousands? This isn’t a sensible position to take. If needed, prepare too much and be more risk averse than you’d like to be, at least in the beginning.

2. Over leveraging

Leverage is the ability to trade more money than you have using a small margin. However, there’s no reason why you should take advantage of the maximum leverage a spread broker offers. Doing so risks over-leveraging and losing more than you invested.

Instead, start small, give yourself flexibility, and take time to learn how to open a position on a financial spread. When you’re experienced, you can start taking more risk.

Financial spread betting with leverage requires understanding the relationship between margin and risk. Read more about spread betting leverage and margin to trade responsibly.

3. Over trading

Trading on financial spreads gives you so many options – possibly too many. The more trades you open, the more risk you’re exposed to. Having lots of open positions at the same time can be distracting and overwhelming.

Don’t ever feel like you’re missing out. There will always be more trades available tomorrow. Take your time, start small, and understand how to trade before you start taking on more risk.

Final thoughts

Spread betting demands strict risk management and emotional control. Without both, traders typically lose capital quickly.

These strategies require different levels of skill, discipline, and risk tolerance. The best fit depends on how a trader manages volatility and exposure.

Understand how each style fits your risk tolerance and only consider participation if you can manage losses without financial impact.