There are three things that I believe is essential to look for when considering your various bets

• VOLATILITY
• LIQUIDITY
• SPREAD

VOLATILITY:-This is the ability of some stocks moving sharper and faster than others. Mean Reversion- Volatility tends to be mean reverting, meaning that the level of volatility in an instrument fluctuates-after a lot of movement the instrument is likely to have a more stable period and vice versa, then the volatility tends to return to the historic average.

To be honest, I prefer the higher volatility instruments for spread betting because they are on average likely to move further quicker.

 LIQUIDITY:-This basically means it’s heavily traded and transparent. It is safer betting on instruments where the underlying instrument has good liquidity. There is a huge danger in investing in assets with little liquidity because of the difficulty in getting out transactions hurriedly. Let’s suppose, you are long of a small cap stock and it moves against you. The next step for you here is to get out. Problem arises when everyone else trading that stock on that same day has the same idea as you. You will then see that there would be a sharp drop in value of this stock. On a whole, there is plenty of liquidity in indices and also the major currencies and other commodities.

SPREAD:-Personally, I prefer to invest in the bigger, more liquid instruments as they tend to have tighter spreads. The bigger the spread, the more success we need with our bets just to reach break even.