Want to learn about spread betting and making money from betting on markets such as the FTSE 100? Then you’ve come to the right place.
At SpreadBettingCompanies.co, we teach new traders a range of subjects such as technical analysis, meta-trading tips and user reviews of the top UK companies. We’ll show you the best places to get free lessons and bonuses, plus our website has sections on Forex, CFD and sports betting in case you want to diversify your trading knowledge.
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Risk warning: Spread betting is a leveraged product and carries a high level of risk to your capital. You may lose more than your initial deposit. These products may not be suitable for all investors, therefore ensure you fully understand the risks involved and seek independent advice if necessary.
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Spread betting involves speculating on the financial markets, and betting on changes in the spread of these stocks or shares. To begin with you’ll need to sign up to an online broker and open an account.
Unlike other types of financial trading, which involves the use of instruments and holding of stock, it is much easier and only involves betting on the market fluctuations of stock. As such, it is much easier to do, contains zero capital gains tax (giving you more profit), and you can place stop-loss orders and make far more money correctly predicting changes in the market than ordinary fixed-odds betting. This form of trading is advantageous in that you can start betting from as little as £1 per point. You don’t require a big capital stash to start trading on the FTSE, and because you are trading on margins as opposed to outright stock you don’t have to pay for the full cost of your position exposure. You have more leverage too.
Most financial platforms also allow you to trade across other markets such as the FTSE, NYSE and DowJones. You can even bet in other markets, such as equities, commodities, currencies (FOREX), indices, or trading in the price of coffee and gold.
Best Financial Trading Sites
Our team of traders (including professional ex-traders, commodities brokers, binary options and day traders) have put together a list of the best ranking UK trading brokers.
Take a look below for reviews of the top brokers, plus special offers and educational tools for new customers:
- Capital Spreads Review + £100 Bonus
- WorldSpreads Review + £300 Cash Back Bonus
- ETX Capital Review + £250 Risk Free Bonus
- Tradefair Review + £100 Bonus
- City Index Review
How Does Trading on the FTSE Work?
When spread betting you will across financial indexes, and each index has a buy (bid) and sell (offer) price. The sell price is always lower than the buy price, this is called the “spread” and it is part of how the trading company takes its commission. By correctly predicting the market fluctuations, you can make profit as the trading price falls above or below the spread.
For example, EXY is trading on the market at 30p bid, and 31p offer. A spread-betting company is also offering 30-31p.
If I think the share price is going to go up, I might bet £10 per point (i.e. £10 per penny the shares move up). If the share price of the company increases to 35 and I decide to sell then I will make £50 profit (5x£10).
In a nutshell, that’s how it works. It is pretty easy to understand, and the currently slowness in the FTSE 100 in recent months has led to more people trading the markets because of the higher profitability involved. It is is very similar to financial trading on futures and options.
Video Explaining an Introduction to and Benefits:
Since 2000, financial spread betting has become much more popular. The Times reported in 2009 that over 30,000 accounts were opened last year. The growth in the industry is mainly due to the fact that unlike other forms of financial trading, spread betting on the FTSE is tax-free, exempt from Stamp Duties, and covers a range of markets. Similar to Binary Options, which allow you to bet on the on the movement of a variety of financial instruments such as gold, currency rates and the FTSE 100 (e.g. higher or lower), it also allows you to make much more money from movements in the markets. That’s why volatile markets and with lots of daily activity (e.g. the UK Rolling Daily) tend to be the best sorts of markets.
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