Spread betting offers a range of positive reasons of why you should consider spreads as part of your investment portfolio:
Tax Free Trading: A well publicised aspect to spread betting is that it is tax free in the UK and Ireland. Any profits you make are free of capital gains and income tax*
No Commissions or Brokerage Fees: The vast majority of spread betting companies offer their service free of commissions / fees
No Stamp Duty: Spread betting in the UK and Ireland is free of Stamp Duty
Geared Trading: Spread betting is inherently a geared product. Hence the expression you can lose more than your initial investment (that’s the negative side to gearing). On the positive side a deposit of £250 will buy you the equivalent exposure of £2,500 in shares. That allows you to maximise your potential profits. Of course it also comes with a high level of risk. As the advert says: markets can move against you and you should trade only that which you can afford to lose
Two Way Trading: This allows you to profit when markets rise or fall. Spread trading lets you Sell (go short of) a market, ie betting on the market to go down. Naturally you can also Buy (go long of) a market, ie bet on the market to go up. When markets are volatile this combination of being able to profit in a bull or bear market can work very well
Limited Risk Orders: Stop Losses and Guaranteed Stop Loss Orders help you limit your risk
Small Minimum Deposits and Dealing Sizes:
Most of the key spread betting companies let you start an account with minimum deposits of only £100-£200 ie far lower than that required by many other forms of investment
You can normally trade in small sizes, typically £1 / €1 / $1 per point
Forex: eg the Majors like GBP / USD, GBP / EUR, USD / JPY all the way to the Exotics like GBP / ZAR, USD / PLN, USD / MXN etc
Commodities:
Energies: eg Brent Crude Oil, US Crude, Natural Gas etc
Metals: eg Gold, Silver, Platinum etc
Softs: eg Soyabeans, Wheat, Corn, Coffee etc
Interest Rates: eg Eurodollar, Short Sterling etc
Bonds: eg UK Gilts, US T Bonds etc
Trade what you know. If you know the Crude Oil or Forex markets inside-out then spread trading allows you to focus purely on those markets.
Freedom: Place your bets online or via the phone
Relaxed Trading Hours: A number of markets are available to trade outside of Normal Market Hours. Note that when you spread bet outside of normal market hours the spreads are often wider
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'10 Reasons to Spread Bet', Tips by D. Jones, last update: 2-Sep-10
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Trade the tightest FTSE spreads available² & find a range of benefits at:
FinancialSpreads.com
£1 per point: Start trading £1 per point/tick & an initial deposit of £30
Multiple markets: Forex , Commodities, Indices & Equities
Risk Warning - Spread betting carries a high level of risk to your capital & you may lose more than your initial investment. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seek financial advice where necessary & make sure spread betting meets your investment objectives.
(1) The FTSE Rolling Daily Spread is 1 tick during market hours & 4 ticks out of hours. 1 Tick is defined as a full FTSE point. See our Product Information for more details. (2) The above information is correct at time of writing. (3) Tax Law can change.
FinancialSpreads.com is a trading name of London Capital Group Ltd which is authorised & regulated by the Financial Services Authority (FSA). Registered address: is 4th Floor, 12 Appold Street, London EC2A 2AW. All information correct at time of publication.
Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it may not be suitable for all investors. Ensure you only
speculate with money that you can afford to lose and that you fully
understand the risks involved and seek independent financial advice where necessary.
Disclaimer:
Online-Spread-Betting.com does not endorse the information and
analysis available on this site. It is provided purely for information
purposes and is delivered as a personal view of the writer. Under no circumstances
is the information hereon to be used or considered as, an offer to sell, or a
solicitation of any offer to buy. The website content does not constitute investment
advice and neither the individual contributor nor Online-Spread-Betting.com accepts any
responsibility for any use that may be made of the content.
* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
