Spread betting is the placing of a bet on the outcome of an event but where the amount you win or lose is determined by how accurate your bet was. You bet on whether the outcome will be over or under a range of possible outcomes. Spread betting is getting more and more popular but the risks are high because you can lose (or win) far more than you bet.

This article will look at the advantages of spread betting over other forms of investment.

  • Any profits that you make from your bets are not taxed.
  • The mechanics of spread betting are easier to understand and use when compared to other financial instruments like futures and options.
  • Spread betting is available in a wide range of indexes and markets, including foreign stock exchanges, housing, sport and many others.  These can all be bet on from one account.
  • Betting is not restricted to the stock exchange hours. Many spread betting firms offer 24 hour trading from the comfort of your own home using your internet connection.
  • Profits can be huge even on low investments due to leverage. Spread betting firms only require deposits of a percentage of the trade rather than the full cost as products are traded on margin.
  • You can exit your position in one or many goes without incurring huge broker fees for each exit.
  • No commissions are paid to the spread betting firm as these are covered by the bid-offer spread.
  • Beginners can find firms that will allow them to bet with small stakes and deposits, such as £30 on deposit and 10 pence per point. This allows them to work through their guide to spread betting with less risk. Spreads are not affected by smaller bets so small positions are not penalised.
  • Stop losses can be used – this means that you can automatically close your bet if the market turns against you and reaches a predetermined level.
  • Credit facilities may be available subject to status avoiding the need to keep capital tied up.
  • Bets are executed virtually immediately as spread betting firms are not brokers. This means there is no fluctuation in price or the chance of no party available to complete the transaction.
  • There is no currency risk as firms allow trades to be done in the customers local currency rather than the currency of the product being bet on.
  • Bets can be made on markets rising and falling.
  • Bets can be made on diversified portfolios. You can bet on an index as opposed to one share so your risk to the market movement is more balanced.
  • There is no need to own the share or other asset you are betting on to make a profit on it.
  • Obtaining a spread betting account is quick and easy.
  • Demonstration accounts are often available with firms, allowing beginners to put their spread betting tips into practice in a virtual environment until they are happy with what they are doing.
  • Spread betting companies are regulated so you know your winnings are safe.

Related posts:

  1. Ever Heard Of Spread Trading?
  2. Spread

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