The Game of Financial Spread Betting

Spread Betting is the game of win or loss policy on the basis of current value, which is to create an active market for both stronger and weaker teams. It’s a kind of easily accessible trading prevailing efficiently in the U.K. Spread refers to the range of outcomes whereas the bet indicates the rise or fall in outcome in regard to spread. In the UK the Financial Conduct Authority regulates this form of betting.

Spread betting is a sort of trade that needs only a particular deposit, which is a small percentage of the whole position. The typical marginal requirement is between 1% and 10% of the total value of the position, which is completely dependent on the market conditions. To reap the rich harvest of it, you should learn financial spread betting.

In this kind of trading, two kinds of prices are predicted such as buying price and selling price. Buying price refers to the price to proceed further with regard to expecting rise in the underlying market. Selling Price refers to the price that is fixed to sell our position in regard to fall in underlying market. The difference in BUY and SELL brings the term SPREAD in to trade.

If you want to learn financial spread betting, you need to follow some common terms mentioned below:

The most common terms used in Spread Betting are:

• High of day (the highest price the market traded at for the day)
• Low of day (the lowest Value the market traded at for the day)
• London Turn: The time when markets drastically change direction between 12:15 and 13:15 GMT with a regularity that is more than coincidental.
• Market session: Session of the market is governed mostly by the regional stock markets.
• Margin Call: If a position moves against, it is supposed to pay additional amount over the initial deposit this is known as margin or margin call.
• Stop and Limit Orders: setting certain levels and if that level is reached, position will be automatically made open or close.
• Limit Order : A Limit order is one that is executed at a better price than the prevailing price

Betting is done on the spread bet of:

• Stock market indices such as the NASDAQ or FTSE
• Individual shares from the FTSE 100 and FTSE 250, but also from leading European and US shares
• Currencies, FX.
• Commodities such as metals and oil
• Futures and options
• Bonds

Advantages of Spread betting:

• No Stamp duty is payable and hence 0.5% is saved compared to a traditional share purchase.
• Tax Free Profits since the Profits on spread betting are not subject to capital gains tax.
• Spread betting companies don’t require any direct commissions or fees.
• Can profit from either falling or rising markets
• A single trading account can give you access to far greater range of financial markets.
• Risk can be limited using a 'Stop Loss' option.
• The ability to place very small bets is a great advantage.

Disadvantages of Spread betting:

• Markets are sometimes very volatile and it could bring very large losses if the position moves against unless stop loss option is utilized.
• Not much applicable for the long-term investor
• Investors do not have any right including no voting rights and will not benefit from dividends.

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