Financial Spread Betting

What is Financial Spread Betting?

Unlike futures and securities exchanges, financial spread betting is tax free. Similarly to CFDs trading, the trader may guess on the direction a market will take without actually investing in an underlying share. But unlike CFDs trading there is no commission fee.

How does it work?

The trader is given a spread on a live underlying market price on a chosen stock or share. He or she then bets on whether this market will rise or fall.

How are Profits and Losses Made?

If the trader bets correctly, and the market moves in their favour, they make a profit of their stake multiplied by each point of favourable market moves. However, if the market moves against them, they will make a loss of their stake multiplied by each point the market moves against them.

What Are the Advantages?

Financial spread betting has its plus points:

  • Tax and commission free trading.
  • Easy to trade.
  • Benefit from versatile markets.
  • Whether they rise or fall.
  • Does not require much trading experience.
  • Does not require large amount of capital.

What Are the Disadvantages?

There are a few setbacks associated with financial spread betting, including:

  • Spread betting is a high-risk activity.
  • Can make substantial losses.
  • Requires some research before begin.
  • Markets can be volatile and experience sharp changes