Posts Tagged ‘Betting’

Ever fancied trying your hand at financial spread betting but haven’t really known what it’s about, or where to get started? In this article we take a very basic look at financial spread betting and ask what it’s all about.

Financial spread betting is a commonly used retail derivative employ to speculate which direction the share price of a stock/commodity/index will take without actually owning or purchasing any of the shares. It is now one of the United Kingdom’s most popular methods of trading, and this is not surprising given that any profits are 100% free from stamp duty and Capital Gains and Income Tax. A spread bet is a contract between the client and spread betting company where the bet is based on an underlying financial instrument. Actual ownership of that financial instrument never takes place.

One of the principle reasons for using this tool is to profit from markets such as stocks and shares, bonds, foreign exchange, and commodities such as crude oil and gold, be they on the UK or international markets. Financial spread betting is a great way for smaller investors to trade without committing to a large financial investment.

Unlike bets in bookmakers, there are no fixed odds in spread betting, but instead a stake is betted (pound s per point) on the direction of the market. If the trader bets that the price will rise, this is called ‘going long’, and if the better predicts the price will fall, this is called ‘going short’. So rather than direct ownership of equities in a company, the trader is betting on which direction he thinks the price will go. Any profit or loss made is determined by the difference in buy and sell (bid and offer) prices.

Another advantage of financial spread betting is that it is also possible to make money if the price falls, unlike the more traditional methods of trading. And making profits here is as simple as making profits in a rising market, it simply depends on how far (how many points) the price has fallen against the price the time the bet is executed.

There are principally two types of spread bets at present. The first is a bet which closes once the markets close, and the second is a bet which will close at the end of a quarterly cycle. Daily spread bets do have expire at the end of each day but for a small ‘interest’ charge you can roll over these bets into the next trading day or trading cycle.

Benefits of financial spread betting include access to most markets 24 hours a day, all markets traded through just one account, and the use of smaller bets. This is attractive for traders who are looking to get in and out of a trade quickly. Another benefit is that there is no commission or fees involved and all of the costs are included in the bid-offer agreement. With financial spread betting your financial products are all in the same place and under the currency of your choice, pound sterling, US dollar, or euro. This saves you the inconvenience and costs involved in exchanging currencies.

As with all trading and investment, there is an element of risk involved and if the market moves in the opposite direction to your bet, you may lose your money. Research your market and only bet what you can realistically afford. Stop-loss facilities are offered by most financial spread betting companies to help you monitor your funds. These facilities are set up to suit your individual financial requirements but they may not be guaranteed and money can still be lost.

Stuart Smith writes extensively on Financial Spread Betting subjects and is the owner of leading website http://www.spreadbettingftse.co.uk

Even when you’ve read in excess of quite a few articles about financial spread betting, there will be so much more to it than that. It’s not as easy as many people think it is to grasp and there’s not one article that could explain everything there is to learn about it. The name itself gives a whole lot of cause for being misunderstood. “Spread Betting” isn’t about cloak-and-dagger betting on numerous items with money run around by guys in trench coats and dark glasses. It doesn’t talk about a bunch of suits yelling at the tops of their voices to let you have your orders in.

What spread betting will be all about is the stance you are taking about the stock market. There are not any shares owned with this form of activity. It’s not like short trades where you have got to get stocks to produce money. Just make a legal account with a broker and you can start with the spread betting . It simply involves your personal personal opinion on how the marketplace will behave or react at a specific time. Will it go up or down or remain still? How far up or down do you think that it’s moving? Intuition is an inferior way of doing these things; these decisions need to be made based on a lot of research. You’ll then be placing your money within a pool with other people who are speculating on the same stock; this would be where it’ll stay until you’re taking it out.

What’s different about spread betting is you don’t own the shares you are betting on. You’re simply speculating on what the share will do and never on the company itself. Then it won’t really matter that the company makes good or not, the speculator still makes the money. Whatever you would like to bet on, you can. It’s not just stocks or shares but any market instrument. Stock indexes, commodities, foreign currency echange – they’re all open to speculation. And one can find no taxes levied on your winnings, an awesome situation for anybody who likes to win .

financial spread betting course – Spread-Betting.com provides unbiased financial trading education and spread betting information to investors in the UK and Ireland.