A good market to start spread betting or to change from another spread betting strategy is FTSE spread betting. This involves spread betting shares on the FTSE stock exchange.
Why is share spread betting on the FTSE stock market a good market?
Firstly the FTSE share index offers lots of liquidity. Many millions of shares being traded every day. There is weight of money. Namely, large amounts of money held by institutions, market makers, stock brokers, and traders all buying and selling FTSE shares on a day to day basis.
This is good for FTSE spread trading because it creates momentum in the share price of listed companies. This produces profitable movement in asset prices.
For successful FTSE spread betting consider starting and concentrating on one particular section. It is bettor to develop expertise in a narrow field of knowledge and profit from it. Concentrate on one section of the FTSE share index.
The FTSE 250
The FTSE 250 is suited to financial spread trading. The companies have mid sized market capitalisation. This provides enough liquidity to trade. Compared to the FTSE 100 who’s companies are much larger FTSE 250 companies are more actively traded. FTSE 250 shares suit FTSE spread betting because they exhibit trends in rising a falling prices that the trader can profit from.
After selecting which area of the FTSE share index to start spread betting it is a good idea to narrow down which FTSE 250 shares to spread bet. Described next is really an exercise in risk management and not a selection process for choosing which shares to trade and when to trade.
Completely remove the following types of companies from your trading decisions. Pharmaceutical companies can exhibit savage movements in price. Their share price can be massively effected by just a few factors. For example, a block buster drug doesn’t get through human trials and the share price drops like a stone. These are all very unexpected situations and not good for financial spread trading. In a similar sense insurance companies are not suited to trading. Their share price is effected by natural disasters: why bother with something where you won’t be able to sleep at night when their is a hurricane season in the Golf of Mexico.
With the remaining companies in the FTSE 250 you can consider for spread trading. This section of the financial spread betting guide does not cover how to chose which shares to spread bet. For a spread trading selection strategy see the main page of the guide to financial spread betting strategies.