WHY CHOOSE SPREAD BETTING OVER CONVENTIONAL TRADING?
There are several easy steps to follow when you have decided to try and "play" on the world financial markets via spread betting.
One thing to keep in mind is that spread betting on financial markets - be it commodities, FOREX or indices is not like trading the actual instrument. Instead of owning the stock or buying currency etc., a trader speculates on the trend of a given market - whether it will go up or down and ultimately profits from the correct educated guess.
Spread betting is recommended for market players who are not too experienced and need some time to get used to the process of online trading.
Most online spread betting platforms allow you to make an automated stop-loss order which automatically limits the trader's losses should the prices start falling too much. This further insures the trader against market fluctuations, so inherent to world markets nowadays.
One of the key advantages of trading with spread bets is that it offers "gearing" or "leverage". This means you can make a bet without needing to put down the full value of that transaction and, as your funds are not tied up, you can make several bets at once.
And finally the one thing that UK and other traders worldwide (depending on domestic tax laws) can benefit from is that the income form spread betting is not subject to Capital Gains Tax or Stamp Duty, and you don"t pay a stock broker"s commission or account fees.
One thing to keep in mind is that spread betting on financial markets - be it commodities, FOREX or indices is not like trading the actual instrument. Instead of owning the stock or buying currency etc., a trader speculates on the trend of a given market - whether it will go up or down and ultimately profits from the correct educated guess.
Spread betting is recommended for market players who are not too experienced and need some time to get used to the process of online trading.
Most online spread betting platforms allow you to make an automated stop-loss order which automatically limits the trader's losses should the prices start falling too much. This further insures the trader against market fluctuations, so inherent to world markets nowadays.
One of the key advantages of trading with spread bets is that it offers "gearing" or "leverage". This means you can make a bet without needing to put down the full value of that transaction and, as your funds are not tied up, you can make several bets at once.
And finally the one thing that UK and other traders worldwide (depending on domestic tax laws) can benefit from is that the income form spread betting is not subject to Capital Gains Tax or Stamp Duty, and you don"t pay a stock broker"s commission or account fees.
A spread bet price always has two parts. The first is the BID or the price you can sell at. The second is the ASK or the price you can buy at.
The Ryanair price is €6.00 – €6.06.
This means you will gain €5 for every cent the price moves up and lose €5 for every cent the price moves down.
You think the Ryanair price will rise and buy at €6.06 for €5 per cent
If the price rises to €7.06 – €7.12
If the price falls to €5.06 – €5.12
You sell at €7.06
You sell at €5.06
Your profit is
(7.06 – 6.06) x 100 x €5 = €500
(7.06 – 6.06) x 100 x €5 = €500
Your loss is
(6.06 – 5.06) x 100 x €5 = €500
(6.06 – 5.06) x 100 x €5 = €500
Betting on the FTSE 100 index allows you to speculate on a stock market without needing to choose individual shares.
The FTSE 100 index bet is priced at
6500 – 6502.
6500 – 6502.
This means you gain €4 for every point the price moves down and lose €4 for every point the price moves up.
You think the index will fall, so you sell at 6500 for €4 per point
If the price falls to 6398 – 6400
If the price rises to 6598 – 6600
You buy at 6400
You buy at 6600
Your profit is
(6500 – 6400) x €4 = €400
(6500 – 6400) x €4 = €400
Your loss is
(6600 – 6500) x €4 = €400
(6600 – 6500) x €4 = €400
A great way to trade oil is to spread bet on the price of Brent Crude
Brent Crude is priced at
$90.00 – $90.04.
$90.00 – $90.04.
The Brent Crude price is in US Dollars but with spread betting there is no need to worry about that. Your winnings and losses are paid for in the same currency as your account.
You think the price of oil will fall, so you
sell at $90.00 for €1 per cent
sell at $90.00 for €1 per cent
If the price falls to $84.96 – $85.00
If the price rises to $94.96 – $95.00
You buy at $85.00
You buy at $95.00
Your profit is
(90.00 – 85.00) x 100 x €1 = €500
(90.00 – 85.00) x 100 x €1 = €500
Your loss is
(95.00 – 90.00) x 100 x €1 = €500
(95.00 – 90.00) x 100 x €1 = €500
spread betting
Another way to make it without the big mistakes
did you know?
While financial spread betting can yeild you great profits, it can cause you great losses so always set stop-loss orders!
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06.November.2008
06.November.2008
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