Formulating a spread betting plan
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Your spread betting plan should be unique to you, setting out your goals and strategies and the factors you feel are important to your success.  

Because it’s a completely personal and individual document, there’s no need to follow a set structure when formulating a spread betting plan. However, it’s generally a good idea to address the following points.

Motivation 

Why do you want to start spread betting? Is it for the money, for the excitement, or simply to learn more about how financial markets work? Whatever your core reasons, it’s a good idea to write them down

Which markets do you already understand or find interesting?

People who aren’t serious or committed about spread betting tend not to be particularly successful, so be honest with yourself about your level of motivation and interest. If you can’t sum up what excites you about spread betting, it may not be right for you.

Goals

It’s time to get specific about your spread betting goals. Because if you’re not clear about what you’re trying to achieve, it’s going to be hard to tell whether you’ve succeeded or not.  

Your spread betting plan is there to guide you towards your goals – and to help you measure whether you’ve reached them. However, it can only do these things effectively if your goals are sensible and set out in detail

Be wary of simply making grand statements about how you want to get rich quick or buy a yacht with your winnings. Large, aspirational goals like this are not very helpful as part of your plan – even if you do end up fulfilling them.

Effective spread betting goals are Specific, Measurable, Attainable, Relevant and Time-bound, or SMART:

Smart: specific, measurable, attainable, relevant, time bound | Formulating a spread betting plan | learn.spreadbetting

The goal to ‘get rich quick’ doesn’t pass this test:

  • You haven’t specified what you mean by ‘rich’
  • Which means you can’t measure whether or not you’ve achieved it
  • And it’s impossible to tell whether or not the goal is attainable
  • You haven’t related the goal explicitly to spread betting
  • You haven’t defined what you mean by ‘quick’

SMART goals, on the other hand, will give you clear targets to work towards. They will be challenging but not daunting, and you’ll know if you’ve achieved them.

Example

Suppose you set the goal ‘I want to make £2000 from spread betting in the next 12 months’.

This is SMART:

  • The figures are specific
  • You can measure your success
  • It’s attainable, assuming you have enough spread betting capital to start with
  • It’s about spread betting, so it’s relevant
  • There’s an explicit timeframe

Time commitment

How much time can you realistically commit?

Before you begin spread betting, it’s sensible to work out how much time you can realistically commit. If you’re very busy with your work and home life, for example, it would be unwise to create a spread betting plan that requires you to place (and manage) a large number of bets per day – certainly not without factoring in how you might use tools like alerts and orders to minimise the amount of time you spend immersed in the platform.

It’s also important to allow enough time to fully understand what you’re doing, practise your strategies and analyse the markets. 

Attitude to risk

Even the most stable financial instruments carry some degree of risk. So before you start spread betting it’s important to work out how much risk you’re prepared to take on, both for each individual position and across your dealing strategy as a whole, and then plan your risk management strategy accordingly.

We discuss this topic in more detail on the attitude to risk page.

Spread betting capital 

The amount of money that you make available for spread betting is known as your spread betting capital.  

It’s important to remember that leveraged products like spread bets are risky, and some unfortunate spread bettors do lose all of their capital and sometimes more. Include the guidelines you want to set yourself in your plan, and calculate your maximum potential loss every time you bet, so you never risk more than you can afford to lose. 

If you find that you don’t have enough money available to place any bets at the moment, you can always practise spread betting using a demo account until you do.

Markets to deal on

Spread betting on financial markets you know little about is risky. If you don’t have a keen appreciation of the factors that might influence the price, you’re more likely to base decisions on gut instinct, which is essentially guesswork. For this reason, you may want to build your plan around markets you already have an interest in. For example, if you follow technology news, betting on tech stocks could work for you.

Consider the identifying features of the markets you want to bet on

It’s also crucial to consider the following:

  • Dealing times – when is the market open?
  • Volatility – on average, how many points does this market move in an hour/day/week?
  • Minimum bet size – what’s the lowest amount you can bet per point of movement in a particular market?

If these factors don’t fit with how you want to bet, or your attitude to risk, then you might want to pick another market.

Record keeping

The best spread betting plans involve keeping a spread betting diary. This is where you record everything that happens during a bet, including why you took that position, the expected profit/maximum risk, the entry point, exit point and how the market behaved during the bet. 

These records will enable you to see how you’re performing over a period of time, and which factors may be influencing your success rate. Are you generally profitable or are you losing money? What’s your win percentage? When you win, is it usually by more or less than when you lose? Are particular markets/times of day/strategies more profitable than others? Keeping track of these statistics will help you to spread bet more effectively and progress towards your goals.

Other details

Your spread betting plan can also contain any other information that you want to set down as a guide or reference for yourself. 

All of these details will then serve as a decision-making tool, informing the specific dealing choices you make over time. 

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