We have all heard of shares. But why do we keep hearing about Financial Spread Betting in this context? Well, the truth is that financial spread betting is one of the fastest growing and exciting possibilities that speculating on the movement of a stock or index. For many investors, it is to be a flexible and cost-effective alternative to trading shares of common stock. This article aims to highlight the benefits of spread betting beyond the benefits ofInvestment in shares. Read on for more details ...
How does it work?
In very simple terms, instead of buying stocks you for going to go up in value or sale of shares you for going to go down in value you place on whether they believe they go up or down. And it's not like a football game where you are either right or wrong. No, with financial spread betting, you will be an amount per point. So if you think RBS shares could rise, you could buy "at £ 10 perPoint. If RBS shares go from 40p to 50p, you have 10 points, equivalent to 100 to € achieved. However, if they go - - say, 35p, you 5 points, lost the equivalent to £ 50th Simple, huh?
What are the advantages of spread betting?
• Stamp duty is not levied VAT (a saving of 0.5% on an ordinary share purchase comparison)
• The ability to "hedge existing positions
• The fact that all bets will usually be conducted in pounds sterling, making the exchange risk ofBets in the foreign country has.
• profits on spread betting are not subject to capital gains tax *.
• Direct commissions and fees are not paid, the spread betting company makes money out of circulation.
• The use of ordinary share accounts that you can not from a decline in equity income (selling "short") with spread betting you can benefit from rising or falling markets.
• The Warrants, they will be on margin therefore can be traded bets placed with arelatively low cost.
• A single account can have access to far greater range of financial markets.
• The ability to place very small bets, some companies will want a place to trade as low as 1p per point.
* (Tax Law are subject to change)
And what are the drawbacks?
• Some markets may be very volatile and leveraged products could suffer huge losses when you move your position against you.
• There may be less suitable tothe long-term investors
• You no rights of investors who have, such as voting, dividends or corporate actions.
What can I trade?
Because you are not really to buy or sell the actual underlying. the range of instruments that can Bet "on far more than the underlying shares. In fact, it is possible on a number of underlying financial instruments bet:
• stock market indices like the FTSE or the NASDAQ.
• Individual sharesthe FTSE 100 and FTSE 250, but also by leading U.S. and European companies.
• Currencies, FX.
• Raw materials such as metals and oil.
• Interest in both short and long term.
• futures and options.
• Bonds.
Summary
Financial spread betting provides a cost effective and leveraged product that the market participants take advantage of market movements, while at the same time the trader to invest small amounts of money until theyare confident in the product.
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