Financial Spread Betting Online

Financial Spread betting is a very risky type of investment. As a result the rewards offered are also high. Spread Betting allows you to trade on a wide range of financial markets in a tax efficient way. (Spread betting profits and losses are not currently subject to UK Capital Gains Tax.). It allows you to profit from movements in the market, up or down, assuming you have bet in the right direction.

A spread bet is an agreement between you and apread betting company to exchange the difference between the opening and closing value of the bet in the future. This date may or may not be specified depending upon what market you are trading. You are betting on the direction of the future price movements. Like with sports spread betting you bet on each point movement. Your profit or loss is simply the difference between the opening price and closing price of your bet, times your stake. You can bet on practically anything eg, major stock markets, currencies, commodities and individual shares quoted on leading exchanges.

Advantages of spread betting:

• No Stamp duty is payable (saving 0.5% compared to a traditional share purchase, commissions effectively built into the spread)
• Ability to bet on markets going down (going short) as well as up (going long)
  All profits are free of UK Capital Gains Tax
• They are traded on margin therefore bets can be placed with a relatively small initial outlay

Disadvantages of spread betting

• It is possible to quickly lose more money than your initial deposit.
• It is less suited to the long term investor, if you hold a bet open over a long period of time the costs associated increase and it may be more beneficial to have bought the underlying asset.
• The leveraged nature of spread bets means that a relatively small movement in price of the underlying security will result in a much larger movement in the value in the spread bet. You can win lots but you can also lose lots.

See our links page for financial spread betting online companies.