Financial Spread Betting — 7 Advantages

spread betting advantages

Here are seven reasons why you should consider financial spread betting

1. Easy to Pick up

Financial spread betting is based upon a simple concept of betting a stake per point. This system works for all of its related markets. It may seem tricky at first but after you have run through a few examples you will see how easy it is to pick up.

2. Low Starting Capital Requirement

You don’t have to be rich to start. You can start of with a few hundred pounds in your account. Unlike share trading there is no commissions so this means you aren’t penalised for smaller trades. The costs are included in the size of the spreads which are the same size no matter the size of your trade size.

3. Diverse Markets

You can trade in a number of different markets from one financial spread betting account. Markets include individual equities from home and abroad, indices trading, currencies, commodities, house prices, bonds and interest rates. The technical element works in the same way over each of these markets, you place a stake per point.

4. Going Short

It you only two positions are long or neutral then you could be leaving a lot of money on the table. Bear markets make people very rich and financial spread betting allows you to take full advantage of that. You can also use shorts as a way of hedging your other long positions.

5. No Tax to Pay

Currently, you don’t have to pay tax on any profits you make and you don’t have to pay stamp duty when you buy. If you are making profits then this is a massive benefit to you especially if you are making profits in excess of the capital gains threshold. Remember though that this may change in the future so check the tax laws on a regular basis.

6. Eliminates Currency Risks

When you buy securities in countries that use a different currency than your own then you are always have a double risk because of the currency exposure. With financial spread betting you make money on a point by point change and the currency that the security itself is trading in doesn’t make any difference. Obviously there are occasions when you do want the currency exposure and in those cases you can use financial spread betting to easily expose yourself to other currencies.

7. Power of Leverage

Now you should always be sure to understand the risks when it comes to leveraging your position. That is because you can lose more than your initial stake. But when used correctly, financial spread betting is a great way to benefit from leverage. Small margin requirements mean that your profits (and losses) are amplified.

The Online Guide to Financial Spread Betting

Financial instruments are chiefly responsible for sustaining the Spread Betting Market in Great Britain. Less popularity is held with sports betting than with the financial market.

Customarily, shares in the stock market are sold at stock brokerage facilities. Selling the shares means they will buy them from you for the least money. Buying shares implies you will pay a higher sum. This is referred to as the offer bid price and the difference between this and the offer price, which is what they would have offered to purchase them from you for, is known as the spread. This is information which can be had from any Financial Spread Betting Guide.

The bid/offer method of betting within financial shares is the same principle across the board. Essentially it’s a matter of buying low and selling high. Assessing the rate at which the share is likely to fluctuate is what is most important. Buy when the share is expected to rise and sell for the highest while it is expected to fall.

England uses a per-penny system of placing the bests on stock trading. The broker will require that you put forward a certain sum which will represent the per-penny price of your chosen stock. Therefore a 50 pound per penny price implies that you gain 50 pounds on each share you win while losing the same 50 pounds when the stock falls. You can win 600 pounds when the share rises 5 pennies!

Betting 50 pounds may seem minuscule at first however stock trading is busy while the prices of the stocks are also quite volatile, rising and falling dramatically sometimes over short periods. Start off small while you are a beginner and get to know the system before making the full plunge.

Bets remain open until they are closed on request by you to the broker. You will automatically surrender to the price of the share at the time you do so. Using a stop loss betting system will ensure that your share selling/buying plan is automatically closed, once the share falls to a set minimum price.

Spread betting is not much different from using a typical broker to manage your funds. As long as you can develop an understanding of the market you can manage things yourself with relative ease. It is highly addictive, especially when the gains are attractive and money is turning over in your favor.

In essence, buying and selling take place at opposite ends of the spectrum or price range and you will win with the spread moving in your predicted direction whether a rise or fall in the stock price. The amount of money in the bet will determine the payout you receive whenever there is a closing point for the session. Your money is not used to purchase shares which is a common mistake assumed in the business. Even betting on full collapses of the market can afford you with sums for the rise or sink in the market share.