What is Spread Betting and How It Works

A type of financial speculation, allowing the traders on the global market to generate profits, is the financial spread betting. Irrespective of the fact that prices are moving up or down, profits are made. Spread betting can be used by those trading in bonds, shares, crude oil, stocks, precious commodities and currencies for an increased chance of generating money. The benefits that the financial spread betting is associated with are many. The first thing to mention is that this trading type generates tax free profits. Next, you won’t be required to pay any extra commissions. The betting company, however, will require from you to pay some money. The amount will be based on the spread, which presents the difference between the sell and the buy price.

Key Characteristics of Spread Betting

Yet a different benefit is the possibility for accessing markets globally 5 days a week at any time. Just one account gives you the possibility for trading stocks on a variety of markets. Choosing the most important currency for trading will save you the inconvenience of exchange and the taxes associated with it. You can also bet on the market price movement when spread betting. Either going short or long, the possibility for profiting is present to you, when the prices on the market switch in your bets direction. The risk is a required element for all dealing with currency shares and stock investments and no exception is made by the financial spread betting. It is possible to lose with such an investment when the bet you placed is in the opposite direction in case of a market move. The mechanisms for stop loss presented to you supervise your funds and add a level of control to your losses.

CFDs vs Financial Spread Betting

CFD trading is one of the betting forms that bears a resemblance to spread betting and is not less famous among those that trade stocks. A number of differences between the two exist, however. No commissions are present in spread betting but some must be paid when trading CFD (contracts for difference). While the financial spread trading isn’t a subject to Capital Gains Tax, the CFD trading is. Dividends are received by CFD traders, while none exist in spread betting. Having similar to financial spread betting properties, the binary bet presents another option for betting. The odds for an events occurrence is what the binary bet price is based on, contrary to the spread betting where the price is based on the underlying instruments price. The flexibility offered is what makes the binary betting famous amid stock traders.

Opening Spread Bet Account

Not much is involved in opening an account for spread betting. It can be accomplished using the telephone or just opening an account online. When the trading stock market is falling, an easy way for gaining is presented through the spread betting. It is, however, not a good choice for an investment plan in a long term. The trading type is good for those desiring to generate stock trading profits in short term.