Spread Betting Systems

When you enter the world of spread betting, you will no doubt be tempted by many offers of  spread betting systems, usually with exaggerated claims as to their performance. This will either thrill you with anticipation or may make you feel that spread betting systems are simply a way to extract more money from you. That would be a shame, because the system is much more than something that you can buy from an anonymous website, it is or should be the basis of your spread betting.

You need to separate the idea of a spread betting system that you can buy over the Internet from having a trading system to guide your spread trading. While not all commercially available systems are worthless, and indeed some are offered with the best of intentions by committed traders, you will probably find more satisfaction and longer lasting results from creating your own system.

At its root, a trading system is a set of strategies put together to guide your betting. As a simple example, you could have a system that requires you to place a long bet on a financial security if the price has risen continuously for the past two weeks, and to close the bet whenever the price closes below the previous day’s value. The idea would be that you find a security in an uptrend, and then close your bet if the uptrend turns down.

Now this is far from a good system, as for a start the uptrend may be nearly over if you wait for two weeks before making a bet – but it is a clearly explained and unambiguous way of making and closing your bets, and that is all a system has to have. Anything that you buy as a spread betting system should have clear instructions on finding possible bets, and how to exit them. What you’re looking for is a set of strategies to govern your betting, so that you can achieve consistent results rather than taking a chance each time you bet.

Once you have even the most basic of systems, then you can test it against historic data to see how effective it will be, and apply modifications to try and improve it, in other words refining the strategies. This is the way that any system is developed, and most traders will continue developing their systems throughout the time they use them, by applying various tweaks.

A system should spell out every action that you take so that the results are repeatable. The system that you have so far is not complete, as it simply tells you when to make your bet and when to close it, and not how much to stake. Money management is an entire topic to itself, but the basic idea is that you never risk losing more than a small percentage of your funds on any bet, as you do not want to be in a situation of not having sufficient money left to carry on betting.

If you want to develop your own system, you may want to base it on another one that is available, but once you start applying your own parameters or tweaks to it then you have “taken ownership” of it and will be more inclined to stick to it and achieve consistent results.