7 Charting Tools for Spread Betting: A Practical Guide to Making Money from Spread Betting with Technical Analysis

Author: Malcolm Pryor Categories: Technical Analysis, Beginners

Quick Summary

A practical guide to seven essential technical analysis tools for spread bettors: ATR (Average True Range), Directional Movement/ADX, Moving Averages, Support and Resistance, Oscillators, Relative Strength, and Momentum. Pryor emphasizes practical application over academic theory, with detailed worked examples and guidance on combining tools into a coherent trading methodology.

Detailed Summary

Malcolm Pryor, a Certified Financial Technician and active spread bettor, wrote 7 Charting Tools for Spread Betting (2009, Harriman House) as a focused, practical guide for traders at any skill level. Although targeted at spread bettors (a tax-advantaged form of leveraged trading popular in the UK), the technical analysis principles apply universally.

Each of the seven tools is presented in a standardized format: background and construction, overview of strengths and weaknesses, recommended settings, how to use the tool, a detailed worked example, alternatives, and conclusion. This consistent structure makes the book an excellent reference.

Tool 1: ATR (Average True Range) measures volatility by calculating the average range of price bars, accounting for gaps. Pryor shows how ATR informs position sizing (adjusting stake size inversely to volatility), stop-loss placement (setting stops based on multiples of ATR), and market selection. Tool 2: Directional Movement/ADX identifies whether a market is trending or range-bound. Pryor explains the +DI/-DI crossover system and the ADX line as a trend strength filter. Tool 3: Moving Averages covers simple, exponential, and weighted variants, crossover systems, and the use of moving averages as dynamic support/resistance.

Tool 4: Support and Resistance covers horizontal levels, trend lines, and the concept of role reversal (former support becoming resistance and vice versa). Pryor shares his preferred technique for identifying the most significant levels. Tool 5: Oscillators examines RSI and stochastics, with emphasis on divergence signals and the distinction between trend-following and counter-trend use of oscillators. Tool 6: Relative Strength compares the performance of one instrument against another (or against a benchmark), useful for selecting the strongest markets in an uptrend. Tool 7: Momentum measures the rate of price change, with applications for trend confirmation and divergence detection.

The case studies chapter demonstrates how multiple tools work together in real trading situations, showing that no single tool is sufficient but that their combination creates a robust analytical framework. The appendix provides additional mathematical detail on ATR, ADX, and moving average calculations.