Shorter-term traders will normally prefer the sort of leveraged exposure they can get from trading spread bets. A spread betting account allows you trade on margin, which makes it viable to target much smaller price movements. Unlike a normal share dealing account you can also sell short so as to profit from market weakness. There is no stamp duty and any gains from spread betting are completely tax-free.
Another of the main attractions is the sheer degree of choice, with clients typically able to trade thousands of different markets. These include popular areas like UK and overseas shares, indices, currencies and commodities. All are accessible through the one account with the trading hours generally the same or better than the underlying exchanges.
Trading on margin allows you to magnify your gains. You can open a £10,000 exposure to a blue chip like British Airways with just a £500 initial deposit in your account. A 10% increase in the share price would then give you a profit of £1,000 before costs. Traders however need to be aware leverage works both ways. If there is an adverse price movement it will magnify any trading losses.
Following the success of spread betting as a trading tool in the UK it was clear that there was an opportunity to develop a market for these products with sophisticated private investors worldwide which is what led to the development of CFDs trading.
Note however that it is much easier to consistently profit day trading indices via a futures broker with a proper trading platform and order book. With spread betting you are trading on their prices and they are skewed significantly to their advantage. Spread betting indices intraday is a road to failure, trading “in and out quickly” is not a long term profitable option. Only spread bet indices over longer time frames. The current market volatility will not be around for the long term. Of course if you’re just interested in making a few weeks of quick intraday profits from indices during these conditions then spread betting is fine for that purpose.
There’s no limit as for how much you can make with spread betting Trading online.
On the contrary, the fact that it’s a no tax trade makes it attractive to the online money makers who wish to benefit from financial trading without sharing anyone else.
Spread Betting is catching popularity by the day making it possible for thousands to trade various products with market value and make money online.
It’s safe to say that spread betting is the kind of gambling that is here to stay, and especially in tough financial times like the current financial crisis, the fact that you can make money even if the market is going down, makes it even more attractive for traders to open accounts in spread betting Trading online websites and start making money out of it.
A good spread bet is one that requires minimal risk and minimal investment as far as the cost of the bet and it’s return on investment is as high as hundreds of percents.
The question remains, to bet on spreads or not. Keep in mind that this is not sports betting, this is financial spread betting that we’re talking about. It might just be that your next door neighbor is sitting in front of is PC and spread trading right now as you are reading these lines.
What’s the difference between financial spread betting Trading online and Forex you ask? Well, the answer is quite simple – whereas in Forex you trade currencies (dollar against euro and so on), in spread betting you can place bets on all sorts of financial valued products such as stocks, other commodities such as oil, gas and so on. You bet on the future price of the product compared to the spread offered by the spread betting company (for example whether the price will go higher than between $30-$35). If you win, than it’s your bet amount times the difference between the max or minimum spread to the actual market value at the end time of the bet.
If you need more information about spread betting feel free to keep reading this blog.