Advantages Spread Betting

By mosesbet · Filed Under Spread Betting Comments Off on Advantages Spread Betting 

Advantages of Online Spread Betting

Spread betting has become more and more popular online for several reasons, and traders are beginning to turn to spread betting because the added incentives and profits that it offers.

Variety of Financial Markets and Instruments to Spread Bet On

First of all, there is a massive choice of financial markets and indexes to spread bet on and speculate (make profit), along with a range of trading companies and broker to do it through.  In essence, once you build up a skill set and gain experience spread betting, you can make money speculating on any financial markets including the FTSE, DOW, commodities markets, indices, future, Forex (foreign exchange markets), currencies and even gold/coffee markets. 

All you need to do to get started in financial spread betting is to open an account at any trading company.  You will usually be able to receive free sign-up bonuses and financial offers too.

Tax Free and Exempt from Capital Gains Tax

Perhaps the main reason financial investors and traders have turned to spread betting, is because you can utilise the same financial market knowledge and analysis without having to pay any tax on profits.

Spread betting profits are tax-free, which means you don’t have to pay any capital gains tax.  Spread betting is also exempt from Stamp Duty too, which in essence avoids paying up to 50% income tax on your profits like you would as a regular trader.  The reason spread betting is tax-free is because this activity is classified as gambling, even though you may be trading the same shares as you would in a conventional share trading account (which pays tax).

Trading on a Margin; Increases Your Leverage, and Reduces Exposure

The third reason for spread betting popularity is that you are trading on margins as opposed to owning the shares or stocks outright.  This has multiple advantages.  Firstly, because you are only trading on margins as opposed to owning massive amounts of stock, you don’t have to pay for your position exposure.  Secondly, you can make large amounts of profit from subtle changes in the market without having to actually own a large capital amount of shares to reap the rewards of sudden point’s movements.  For example, in order to take advantage of an upsurge in the share price of Microsoft by 1pt, conventionally you’d have to buy thousands of pounds worth of shares.  Spread betting allows you to bet small amounts on the point’s changes however while receiving big profits.  You only need wager £100 per point in order to make £100 profit on Microsoft’s share price from 125 to 126 for example.

You can even make money from falling house prices.  Some of the spread betting companies allow you to short house prices, based on future contracts (up to 3, 6 or 9 months ahead).  This means you can gamble on house prices falling and then rising again in a year’s time, and make a profit on the difference.  Although this strategy is incredibly risky (given you can end up losing a significant amount of money in the short-term), it is still one advantage of spread betting.  You can also short other markets, such as silver and gold prices for example.

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