Monday, January 3, 2011

Developing a good Forex Spread Betting Strategy

A lot of people tend to be confused regarding the difference between a Forex spread betting strategy and a general trading strategy. While there is an abundance of information and facts available online about Currency trading strategies, they often overlook the importance of manipulating your own Forex spread betting technique to increase profit but still at the same time limit your losses. Let's see if we can steer you in the right direction to help you develop a good Forex spread betting approach.

It makes perfect sense to have a target profit as well as an appropriate stop loss set at the level you are willing to take a loss, however, you need to consider what should happen when your trade does not quite reach your profit target? You basically have one of the two following options:

1. Let the trade reverse and possibly hit your stop loss.
2. Change to a Forex spread betting approach to achieve a profitable trade.

Many have employed a quick profit Forex strategy that targets a smaller pip profit of around 10 pips. Using this approach a trade is entered with the goal of achieving a 10 pip profit. While this doesn't sound like a huge amount, let me explain why this can work in your favor. If you are trading new highs and lows, you can quickly reach your 10 pip target. So imagine if you take your profit at 80%, you will still make a nice profit.

You should also consider adjusting your stop loss to whichever one of the following levels looks safest:

1. The level of your trade entry point
2. The last support or resistance level


Now consider how this Forex spread betting strategy all ties together; If your stop loss is set to your trade entry level you will have virtually no risk of losing because if the trade direction reverses you still will have made your original profit. On the other hand, if the trade continues in a positive direction, you could easily make your way to 100 pips or more. Remember to keep adjusting your stop loss level, as this will secure your profits while leaving plenty of wiggle room for your trade to achieve your goals.

You now have a risk free Forex spread betting strategy that you can simply repeat at every opportunity.  Remember, implementing a good Forex spread betting strategy is an important part of your overall trading system.