Reading trading charts is one of the most useful skills for spread betting beginners. Charts help you see price behaviour, spot trends, identify potential entries and exits, and manage risk more confidently.
Candlestick Charts
Candlestick charts are the most widely used chart type in spread betting because they show a lot of information quickly. Each candle shows four key prices for a chosen time period: open, high, low and close.
The open is the first price traded during that time period, while the close is the last price. The high is the highest price reached, and the low is the lowest price reached.
A bullish candle usually means the close is higher than the open, so price moved up over that period. A bearish candle usually means the close is lower than the open, so price moved down.
The "body" of the candle shows the distance between the open and close. The thin lines above and below the body are called wicks or shadows, and they show how far price moved beyond the open and close during the period.
Example: If the FTSE 100 opens at 10,800, rises to 10,840, falls to 10,790 and closes at 10,830, that candle is bullish because the close is above the open.
Line Charts, Bar Charts and Candlesticks
Line charts are the simplest chart type. They usually connect the closing prices of each period, making them useful for seeing the broad direction of the market without much detail.
Bar charts show open, high, low and close in a compact format, just like candlesticks. They are less visually intuitive for beginners, but they contain similar information.
Candlestick charts are generally the best starting point for beginners because they are easy to read and quickly show market sentiment. A long green or white candle may show strong buying pressure, while a long red or black candle may show strong selling pressure.
If you want a simple overview of trend direction, a line chart can be helpful. If you want to study market behaviour in more detail, candlesticks are usually the better choice.
Timeframes and How to Use Them
A timeframe is the length of time each candle, bar or line point represents. Choosing the right timeframe matters because the same market can look very different depending on whether you are viewing 1-minute, 1-hour or daily charts.
A 1-minute chart is often used by scalpers and very short-term traders who want to catch quick moves. These charts are noisy and fast, so they can be hard for beginners to use well.
An hourly chart is useful for intraday traders who want a balance between detail and clarity. It can help you see the day's trend without being overwhelmed by every small fluctuation.
A daily chart is often best for swing trading, where positions may be held for several days or weeks. It filters out short-term noise and helps you focus on the bigger trend.
A good habit is to use more than one timeframe. For example, you might check the daily chart for the main trend, then move to the 1-hour or 15-minute chart to look for a more precise entry.
Example: If gold is rising on the daily chart but pulling back on the 15-minute chart, you may wait for the short-term pullback to end before entering a long spread bet.
Support and Resistance
Support is a price area where a market has often stopped falling and bounced higher. Resistance is a price area where a market has often stopped rising and turned lower.
These levels matter because traders often place orders around them, which can cause the market to react there again. Support and resistance are not exact lines; they are usually zones where price may pause, reverse or break through.
If price repeatedly bounces from the same area, that area may become a stronger support or resistance level. Once a resistance level is broken, it may later act as support, and the opposite can also happen.
Example: If crude oil has repeatedly fallen near 78.00 and bounced, 78.00 may be acting as support. If it later breaks above 82.00 and holds there, 82.00 may become new support.
Beginners should not treat support and resistance as guarantees. They are useful clues, not certainties, and breakouts can happen quickly in volatile markets.
Trend Lines
Trend lines are diagonal lines drawn on a chart to help show the direction of a market. In an uptrend, a trend line usually connects a series of higher lows. In a downtrend, it usually connects a series of lower highs.
Trend lines help traders see whether momentum is still intact. If price keeps respecting the trend line, the trend may still be healthy. If price breaks through it decisively, the trend may be weakening or changing.
Drawing trend lines is a skill that improves with practice. You should connect the most obvious swing points and avoid forcing a line to fit too many points that do not really align.
Example: If natural gas keeps bouncing from a rising line of higher lows, that may suggest buyers are still in control.
The Three Most Useful Indicators
Indicators are tools that help you interpret price action. For beginners, it is usually better to start with a small number of simple indicators rather than cluttering the chart.
Moving Averages
A moving average smooths price data to make the trend easier to see. It shows the average price over a chosen period, such as 20, 50 or 200 candles.
If price is above the moving average, the market may be in an uptrend. If price is below it, the market may be in a downtrend. Traders also watch for moving average crossovers, where a short-term average crosses above or below a longer-term one.
Example: If the 50-day moving average rises and price stays above it, a trader may see that as a sign of ongoing upward momentum.
RSI
RSI stands for Relative Strength Index. It is a momentum indicator that helps show whether a market may be overbought or oversold.
RSI usually moves between 0 and 100. Many traders watch levels above 70 as potentially overbought and below 30 as potentially oversold, although these levels do not automatically mean price will reverse.
RSI is most useful when combined with trend context. A strong uptrend can keep RSI elevated for a long time, so it should not be used on its own.
Example: If gold has risen strongly and RSI reaches 75, a trader may start watching for signs of a pause or pullback.
MACD
MACD stands for Moving Average Convergence Divergence. It helps traders spot changes in momentum and possible trend shifts.
MACD is usually made up of two lines and a histogram. When the lines cross or the histogram changes direction, it may suggest momentum is strengthening or weakening.
Beginners often use MACD to confirm a trend rather than predict one from scratch. It works best when combined with support, resistance or moving averages.
Example: If MACD turns positive while price breaks above resistance, that may support a bullish trade idea.
Common Chart Patterns
Chart patterns are shapes that can appear on price charts and may hint at future movement. They are not perfect signals, but they are widely watched by traders.
Head and Shoulders
A head and shoulders pattern often appears near the end of an uptrend. It usually has three peaks: a higher middle peak surrounded by two smaller peaks.
The pattern can suggest that buying pressure is fading. If price breaks below the "neckline," some traders see that as a bearish signal.
Example: If a share index forms a left shoulder, a higher head and then a right shoulder near the same level as the left, a break below the neckline may signal weakness.
Double Top and Double Bottom
A double top is a pattern where price makes two highs near the same level and then fails to continue higher. It can suggest resistance is strong and an uptrend may be ending.
A double bottom is the opposite. Price tests a low twice and then starts rising, which can suggest support is holding.
Example: If oil hits 82.00 twice but cannot break through, traders may watch for a possible double top.
Flags
Flags are short consolidation patterns that often appear after a strong move. A bullish flag slopes slightly down or sideways after a sharp rise, while a bearish flag slopes slightly up or sideways after a sharp fall.
Flags often suggest a pause before the previous trend may continue. They are useful for traders looking for continuation setups.
Example: If gold rises sharply, then drifts gently lower in a narrow channel before moving up again, that may form a bullish flag.
How to Spot Entry and Exit Points
A good chart setup usually combines trend, support or resistance, and confirmation from price action or an indicator. Beginners should avoid entering a trade just because a chart "looks" bullish or bearish.
An entry point is the price area where you decide to open the trade. A sensible entry often comes after the market confirms your idea, such as breaking a resistance level or bouncing from support.
An exit point is where you decide to close the trade. This may be a profit target, a stop-loss, or a signal that the trend is weakening.
One practical approach is to look for alignment between the bigger trend and the shorter-term chart. For example, if the daily chart is bullish and the price pulls back to support on the 1-hour chart, that may offer a clearer long setup.
You should always plan both sides of the trade before entering. That means deciding where you will take profit and where you will cut the trade if it goes wrong.
Example: If crude oil breaks above a resistance level at 80.50 and closes above it on the hourly chart, a trader might enter long, set a stop below the broken resistance, and aim for the next resistance zone.
Practical Tips for Spread Betting Platforms
Most spread betting platforms provide live charts with indicators, drawing tools and multiple timeframes. Learn where to find candles, trend lines, moving averages, RSI and MACD before placing real trades.
Use the chart to build your idea, not just to click buy or sell. A trade placed without reference to support, resistance and trend is often little more than a guess.
Keep your chart clean. Too many indicators can make the screen confusing and lead to conflicting signals. For beginners, a simple chart with price, one or two moving averages, RSI and key levels is often enough.
Always check the spread on the platform before entering a trade. A setup that looks good on the chart may be less attractive if the spread is wide.
It is also worth watching for gaps, especially around major news or overnight market moves. Spread betting on fast-moving markets can lead to slippage, so a chart signal should always be paired with risk controls such as stop-loss orders.
Common Beginner Mistakes
One common mistake is using too many indicators at once. This can make the chart harder to read and cause confusion when signals disagree.
Another mistake is trading every candle pattern as if it were a reliable signal. Candlestick shapes can be useful, but they are much stronger when they appear at support, resistance or trend lines.
Beginners also often use the wrong timeframe. A signal that looks strong on a 1-minute chart may be meaningless on the daily chart, and vice versa.
A further mistake is ignoring the wider trend. Trying to buy every small dip in a strong downtrend can be costly if the broader move is still bearish.
Many beginners also forget about risk management. Even a good chart setup can fail, so every trade should have a stop-loss and a sensible stake size.
Finally, some traders jump in too early. Waiting for confirmation, such as a breakout close or a clear bounce, often gives a more reliable entry than predicting the move before it happens.
Final Thoughts
Chart reading is a practical skill that improves with repetition. The more you study how price reacts around support, resistance, trend lines and indicators, the easier it becomes to spot high-quality spread betting setups.
For beginners, the best approach is to keep charts simple, use more than one timeframe, and focus on clear price behaviour rather than chasing every signal. If you can read candlesticks, identify the trend and manage risk, you already have a solid base for spread betting. Explore our strategy guide for how to put these skills into practice.
Between 51-82% of retail investor accounts lose money when spread betting. You should consider whether you understand how spread betting works and whether you can afford to take the risk of losing your money.
