Financial spread betting is a popular trading area for the investor whom wants to try their luck investing without the use of all their capital, it is also popular as it offers the ability to trade on the market movements, as well as to bet in commodities, Forex, interest rates, currencies, indices as well as bonds, shares and stocks.
One of the key factors which make spread betting so enticing to traders is that they are not in fact buying the actual shares or stocks, but you are speculating (betting) on the if you feel the market will rise or fall, which is also termed going long or going short.
Other main reasons for the popularity of financial spread betting are as follows: 1) No taxes must be paid on gains; spread betting is actually considered a form of gambling in the United Kingdom at this time.
There is also no stamp duty to be paid.
2) Also offers the use of margined trading; this means that only a percentage of the initial cost of the share which is generally a very small outlay.
3) The trade is between the buyer and the spread betting firm, thus allowing for instant executions of orders.
4) Commission free - financial spread betting does not require the use of a 'middleman' thus doing away with commission charges.
5) Ability to make profits even if the market falls.
This sector makes use of margined trading and leverage, which allows a bet to be made for a fraction of the actual price of a share.
If you were buying shares you would need to pay 100% of the share cost, however, with margined trading, you may only have to outlay 5%, which is a certain percentage of the underlying instrument.
This allows you to not tie up all your capital and place other bets, or trades in other markets.
There is of course disadvantages and risks which are involved when betting on any financial product, it is important that stop losses are in place or you are making use of a limited risk accounts.
Do not be fooled by thinking that you cannot lose all your capital since you are not betting it all by trading on margin.
This is one mistake you do not want to ever fall victim of.
Losses can be magnified over and above initial outlay if the instrument's price moves against you.
One of the key factors which make spread betting so enticing to traders is that they are not in fact buying the actual shares or stocks, but you are speculating (betting) on the if you feel the market will rise or fall, which is also termed going long or going short.
Other main reasons for the popularity of financial spread betting are as follows: 1) No taxes must be paid on gains; spread betting is actually considered a form of gambling in the United Kingdom at this time.
There is also no stamp duty to be paid.
2) Also offers the use of margined trading; this means that only a percentage of the initial cost of the share which is generally a very small outlay.
3) The trade is between the buyer and the spread betting firm, thus allowing for instant executions of orders.
4) Commission free - financial spread betting does not require the use of a 'middleman' thus doing away with commission charges.
5) Ability to make profits even if the market falls.
This sector makes use of margined trading and leverage, which allows a bet to be made for a fraction of the actual price of a share.
If you were buying shares you would need to pay 100% of the share cost, however, with margined trading, you may only have to outlay 5%, which is a certain percentage of the underlying instrument.
This allows you to not tie up all your capital and place other bets, or trades in other markets.
There is of course disadvantages and risks which are involved when betting on any financial product, it is important that stop losses are in place or you are making use of a limited risk accounts.
Do not be fooled by thinking that you cannot lose all your capital since you are not betting it all by trading on margin.
This is one mistake you do not want to ever fall victim of.
Losses can be magnified over and above initial outlay if the instrument's price moves against you.
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