Spread Betting Articles

Although UK tax laws may change in the future, the great thing about spread betting is that it is tax free and provides far more opportunities to make a profit than regular share trading (CFDs).  (More information on the tax-free status of spread betting can be found at the Trade2Win forums or on the HMRC.gov.uk website).

You can make a profit in spread betting on the FTSE (or other markets) by speculating on the movement of both rising and falling share prices.  Leverage in share trading means that you can make far more money than your instant deposit because you are trading on margins; however the downside to this is that you can also lose more than you deposited.  Because you are betting on a per-points basis in spread betting, a small movement in stock prices can lead to a massive loss.  That’s why it’s important to read up on spread betting strategy and tips before you begin trading.

Spread Betting Strategy Articles:

Risks of Spread Betting

Remember that it is conceivable for you to lose more than your initial deposit on a single bad trade.  However this is OK, in fact most spread traders lose money on 50% of their day trades by spread betting on the FTSE.  The important thing is that you make more money on the trades that you do get right than the ones that do badly.  This will lead to a high monetary sum giving yourself profits.

By reading some of our spread betting articles you’ll be able to learn more about spread betting and the different types of orders that you can place, along with reducing your financial risk exposure.  For example, you can learn what percentage of your starting capital to wager on each bet along with how to prevent big losses with stop-loss and stop-limit execution orders.

Spread Betting Example:

I believe that Microsoft’s share price will shoot up in the next few hours.  I check online and see that Microsoft’s current share price is 150. I decide to wager £10 per point movement and the platform I’m using gives me a bid (buy) price of 151.  5 hours later, Microsoft’s share price rises to 160 and I close my account for £100 profit.

In general, this is as easy as spread betting gets.  The above example is called a long bet and involves wagering that the price of a specific index/stock will rise, meaning that I look for the lowest bid price and buy as much as possible.  Usually the minimum amount you can wager is £1 per point.

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