Financial spread betting involves betting on whether you think the prices of particular products are going to increase or decrease without actually owning any assets you’re betting on.
The amount you win from your wager depends on how accurate your wager is; this differs from standard betting where there’s usually a set amount you stand to earn if you win. As this article in the Telegraph explains, however, spread betting can be quite a risk. If you’re not sure whether spread betting is for you, read on for some of the top benefits of spread betting.
You can trade with smaller amounts of money
If you’re a beginner and are still getting used to trading, spread betting is a great way of gaining trading experience. One of the major benefits of spread betting for beginners is that it doesn’t require you to bet with large amounts of money. While you’re getting used to spread betting, you can betting with smaller amounts of money, then once you’re more experienced and confident, you can steadily increase the amount of money you bet with.
You stand to gain even when markets fall
Financial spread betting is all about guessing the price movements of different markets. One of the most appealing advantages of spread betting is that you stand to gain even if the market price goes down. In other words, you stand to gain no matter what direction the market is heading in. This is one particular feature of spread betting that sets it apart from other forms of financial trading, as not many of them enable you to gain when markets decrease in value.
Your profits are tax-free
Because you don’t actually own the shares yourself, when you gain from spread betting, you don’t have to pay tax or stamp duty on the profits you’ve made. There’s also no need to pay things like account fees or stock broker’s commission. This means that all the money you earn from spread betting is yours and you’re not going to see a portion of it taken away from you any time soon. Remember that tax laws and other such laws and procedures are subject to change.
You have ample leverage
Spread betting offers great leverage because when placing a bet, you don’t have to put down the full value of the bet; instead, you only have to put down a fraction of the total value of the transaction. What this does is it frees up the rest of your money so you can spend it as you wish elsewhere. You can therefore have numerous bets placed at the same time, rather than having all your money put on one single action; because of this, spread betting can allow for potentially greater gains.
The Financial Times says spread betting is becoming less popular in UK as a consequence of markets becoming less volatile. The benefits mentioned in this article are just some of the reasons why you should consider spread betting; bear in mind, however, that success is never guaranteed. There are many companies that you can start spread betting with; CMC Markets spread betting, for example, is just one of many you could partner with.