Does Spread Betting Benefit?
Spreadbets are designed for short-term trading and have significant advantages over normal dealing, most importantly the ability to trade on margin (from just 5%) and the ability to go short.
- Tax free: Under current UK legislation all profits from spread betting a free from taxation.
- No fees or commissions, just the spread: Spread betting providers do not charge fees for trading platforms or commission for trades on their spread betting markets. The width of the spread dictates how much you will pay to open and close a trade with a provider.
- Leveraged trading: Spread betting is a leveraged product which means you only have to deposit a small percentage of the value of the contract with us to open a trade. The leveraged nature of the product also means that you could lose more than your initial deposit, rapidly and substantially. Therefore you should always ensure you only speculate with money you can afford to lose.
- Online or over the phone, thousands of markets available: With over 5,000 markets to trade, global indices, individual shares, currencies and commodities are available to trade online or over the phone.
- Limit your losses: A comprehensive risk management system means you can manage your account easily and efficiently. The simple and advanced order functionality means that limiting losses and maximising returns has never been easier.
Spread bets are a user-friendly, highly geared way to invest in financial markets for investors who have not necessarily got huge amounts of risk-capital at their disposal. The advantage of a spread bet is that it offers traders a stake in a larger number of shares and therefore the gains can be far higher than if they just bought the actual shares.
Spread betting is tax free! The main benefit is being able to bet on things going down, to make money during the bad times. Also I can trade AIM (the LSE’s market for smaller growing companies) stocks tax free. Otherwise I would have to pay tax on a lot of the profits
* Spread betting is free from Capital Gains Tax (CGT) and there is no stamp duty. Tax treatment depends on individual circumstances and may be subject to change in the future
Spread betting is also all about trading in pounds per point which makes it easier to understand and figure out your risk. Let’s say you were going to buy the pound against the dollar and you were going to put a 100-point stop on it, you could do £1 per point and know that your risk was £100.
Spread betting providers make a market on thousands of UK, US and world shares with transparent pricing from stock exchange around the globe. Client can also trade stock indices, FX and many other markets on margin, all through one trading account. Spread bets do not incur stamp duty in the UK.
There are several advantages to trading individual shares through spread betting, rather that through the normal channels. There are tax benefits, leverage (potentially great returns on minimal investments) and a number of other advantages to using spread betting to get exposure to shares -:
- The ability go short (sell a share you don’t own). This is difficult for most people using normal channels, example banks and stock brokers. Most people buy shares expecting them to rise – they have little knowledge of ‘short selling’
- The ability to place fairly small bets. Horses for courses and if you like being able to trade at 50p a pip, spreadbetting cannot be beat- even Meta trader based spot trading means you will take a haircut in some way.
- There is no exchange rate risk on currency commissions which is particularly a good advantage if the currency you bet in is strong. In buying shares, even if the price moves up, you could still lose money as currencies fluctuate.
- Tax free gains
- 24 hours dealing. Like other online trading and platforms, with spread betting you can trade outside of the normal market hours.
- Mobile Trading. Undoubtedly mobile based applications give you the advantage such that you are not restrained to trading from one place.
- Spread betting providers are all regulated just as any other part of the financial services industry.
The profits you make on your spreadbets are free of tax including stamp duty and capital gains tax. Spread betting appeals to those traders and investors who like to gain market exposure at almost no expense to a wide range of financial instruments, commodities and currencies, as well as those who are close to their Capital Gains Tax limit and expect this tax to rise further.
The ability to go long or short and to leverage trades also makes trading spreadbets suited for hedging strategies. If an investor has a physical portfolio of shares, commodities or foreign currency he believes could take a hit in coming weeks, he could hedge that risk by taking an opposing position with a spreadbet.
Another use of spread bets might be if you have a portfolio of shares but believe the market is going to fall short-term. Selling and buying back some of the shares involves more cost than dealing with individual shares (stamp duty for starters) and probably means unbalancing your portfolio if selling some. Placing a downbet on the FTSE is an easy way to avoid these costs and hassles.
Spread betting benefits from high standards of regulatory oversight, allowing all investors to trade these products with the confidence that spread betting providers meet standards required by the regulator and that providers are subject to continuing obligations.
What about CGT ? Am I missing something by wanting to spread bet for longer holds, its just that at the moment, I cant see much of a downside to spreadbetting whatever I can. Ok some shares you can’t but most are permissible. As I said spread betting is still relatively new to me and want a general consensus of advice before I regret something down the line.
The problem with spreadbets is the leverage. If there is a sell-off it can hurt. I think spread bets are fine and use them a lot especially for my school run trades, but make sure you are within your means.
The million dollar question is of course: what does spread betting is all about? Well, since this is the main thing to answer before we all getting into the spread betting markets, we must understand what does spread betting is talking about and how we can make the revenue from it, online. The spread betting markets are so big and so various that each can place his bets and make sure to make the revenue from it.
In order to understand what does financial spread betting talking about and how it can be benefit for me, I got to understand that the Spreads can be more flexible than any other online market. The whole bet here is of course on the movement of the market, if it will go up or down. In either case, growing market or decreasing market, the potential for the users is to make revenue.
The Spread betting is being calculated according to the market online, means that the same numbers you will see in your Spread betting account are the numbers in the market itself. If you places a bet on some market and it went up, your bid will be calculated (if you lost and if you won ) according to the position of the market at the point you places the bet and the current position. This is actually the heart of the system to explain how does spread betting being calculated in the user account.
The meaning of the market name “Spread betting” is from the word spread. There are two prices noted by the spread betting company: the bid and the offer each refer to selling or to buying – to winning or to lose at a specific spread bet. The offer price is also called the spread and from here its name. If you are being asked what does spread betting means- the meaning is the spread itself, the offer price.