Spread Betting Advantages

Spread Betting Advantages

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Option.Finance is a free, online comparison service allowing traders to compare financial brokers and products.
Option.Finance is a free, online comparison service allowing traders to compare financial brokers and products.
Option.Finance is a free, online comparison service allowing traders to compare financial brokers and products.
The main advantages of spread betting are:
Home » Advantages of Spread Betting
With spread betting you can start from a small amount of capital. You can open an account for less than £100. Trades can be placed from an account balance as low as £50.
You only pay a fraction of the full cost of the trade, usually 10%, up front. This is called margin trading.
It enables you to profit from rising (bull) or falling (bear) markets.
All the cost associated with the bet are built into the bid-offer spread.
Gains are not taxable. Unlike share trading where gains made are potentially taxed at your current income tax rate, spread bets are not subject to capital gains tax.
For example, if you own a share paying a dividend, income from that dividend is taxable at your current income tax rate. Spread bets do not pay dividends. Instead, the dividend payment is built into the bid-offer spread so the holder of a position in a dividend-paying share will reap the rewards in the form of a tax-free capital gain rather than taxable income.
Spread bets are free from stamp duty, currently charged at 0.5% on all share purchases. This is because a spread bet is a contract between the client and the spread betting company and no physical exchange of shares actually takes place.
For a purchase of £5,000 of any share, the stamp duty charge paid to the Governance is £25. A trader who deals twice a week, 52 weeks a year will end up paying £2,600 in stamp duties alone.
If you were to trade £25,000 in normal share transactions each trading day via a stockbroker, you would pay the Government more than £31,500 in stamp duty over a year.
One account for a range of financial products. One spread betting account and one account number allows investors to trade indices, single shares, currencies, commodities, bonds and options on a number of global markets.
Spread betting companies are not brokers, so all trades placed are contracts between the client and the spread betting company. This means that each execution is not necessarily traded over an exchange so there is no delay in routing the order. This allows instant execution in markets where this would not normally be possible.
Dealing in foreign shares can be cumbersome and impractical if you are an average investor. You have to deal with a third party and pay transaction charges. For example, in 2002, traders found it strenuous to balance their books in sterling terms because of the ups and downs of the yen and the US dollar.
Spread betting allows traders to bet in pounds per point on international shares.
Dealing in pounds per point, dollar per point or euros per point make tracking your investments much easier. For example, is share X is up 15 points on the day, it is far easier to estimate your profit by calculating that you have made a £10 per point increase than calculating your number of shares, say 12,500 multiplied by 15 points, less broker charges stamp duty, tax and so on.
Some spread betting companies are open 24 hours of a day. This is in contrast to normal market trading hours which run from 8.00am to 4.30pm.
Less paperwork is involved compared to conventional share dealing.
Setting up a spread betting account is simple and easy. All that is required in most cases, is a signed application form and utility bill.
It is a practical form of short-term investing to complement any long-term investments.
Trades executed online are anonymous, fast and cheap.
Online trading platforms for spread betting are said to be more advanced compared to those for traditional share dealing.
Some spread betting companies offer a virtual trading platform for you to practice on. This offers an opportunity for potential spread betters to understand the markets, the dealing process and test trading strategies before committing real money. The ability to practice with virtual money reduced the risk of entering into incorrect positions and helps novice traders to understand the risks involved in dealing with geared products.
Spread betting companies provide access to investment research, news, tutorials, market updates and commentary that are normally only available to institutions.
The type of bets you can do range from financial; shares, indices, commodities, currencies. Sports-based; football, horse racing, rugby. To fanciful, how many sips of water the Chancellor is going to drink during the Budget speech.
You can control when you want to take profits and run your bet until the point at which you decide to close it. The losses can be unlimited too but, as we shall discover later, they can be capped through stop-losses.
Spread betting is provided by Admiral Markets and London Capital Group .
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3. Profit from rising or falling markets One of the biggest advantages of spread betting is that it doesn't matter in which direction the market is going - you can still make money. A profit can be made in a falling market as well as in a rising one. 4. Trade on Margin
We've taken each of the key benefits in turn to explain exactly why and how spread betting can work for you: Leverage, Tax Treatment, Simplicity, Flexibility, Range of Markets, Costs, Execution, Currency Exposure. Advantage of Leverage Arguable the core advantage of spread betting , transactions are highly leveraged by their very nature.
Home » Advantages of Spread Betting It is easier to understand than other financial instruments. The process is less complex than that for options, features and Contracts for Difference (CFDs). With spread betting you can start from a small amount of capital. You can open an account for less than £100.
The advantages of spread betting are as follows: Income and Capital Gains Tax-Free. Any gains you make are free from UK capital gains and income tax. No Commission or Stamp Duty to pay. No direct commission or brokerage fees are payable, you only pay the bid-offer spread . Trade many markets and Instruments from one account.
Advantages of Spread Betting . Spread betting has become increasingly popular among retail investors and city traders because of the additional benefits that it offers. In short, with a little market knowledge and expertise it is far easier to make money from spread betting . In fact, TradeFair cheif executives have stated that spread betting in ...
Key Advantages of Spread Betting "Spreadbets and CFDs were designed as a tax arbitrage product and are extremely effective in doing so." It is extremely easy to open and close trades on-line. Spread trading companies have invested heavily in user-friendly web sites to encourage volume on-line business. It is easy to place and move stop losses.
Jan 7, 2021 In addition to the absence of commissions and taxes, the other major benefit of spread betting is that the required capital outlay is dramatically lower. In the stock market trade, a deposit of as...
This is a key advantage of spread betting in that gains are free of tax (no capital gains or income taxes and no stamp duty). When using a traditional stockbroker, all profits are subject to Capital Gains tax. Moreover, spread bets are free from stamp duty, currently charged at 0.5% on all share purchases.
Spread Trading Advantages There are various advantages to spread trading over traditional share and futures dealing -: Financial spread trading offers leverage similar to the futures market but with the added advantage of offering traders the opportunity to decide exactly the size of the trade without being limited by fixed contract sizes.
With spread betting , you can lose 200%, 300%, 1000% in a matter of minutes, all as a consequence of leverage, thus the risks involved in spread betting are comparatively much larger than with other trading styles and can result in problems far beyond the consumption of your trading capital. Funding Costs
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November 11, 2010 by Michael posted in Spread Betting • No Comments

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Spread betting has become increasingly popular among retail investors and city traders because of the additional benefits that it offers. In short, with a little market knowledge and expertise it is far easier to make money from spread betting. In fact, TradeFair cheif executives have stated that spread betting in the UK is seeing growth of 30-40% per annum.
But What Exactly Makes Spread Betting So Popular Among Day Traders?
First of all I think that the biggest incentive for spread betting in the UK is that all profits are tax-free (you can confirm this on the HMRC.gov.uk website here). This means that you don’t have to pay 40%-50% income tax like you would for normal share trading, which in terms helps you to generate more profits. Spread betting is also exempt from Stamp Duty because there technically isn’t a 3 rd party involved (there is a 0.5% sub-charge on all shares bought under conventional share trading).
The reason that spread betting is tax-free is because the body which regulates it (FSA, now the FCA (Financial Conduct Authority) identifies spread betting as a form of gambling. This is because the odds are always slightly in the bookies favour because of the “spread” – how the brokers generate their commission. You’ll notice that the “bid” price is always slightly higher than the “offer” price, leaving the odds marginal in the financial brokers favours. Although 10 or so years ago the spread charged by the spread betting platforms was up to 10 points, nowadays these have been reduced due to higher competition.
The “speculative positions” that you can take up with spread betting, along with leverage, also means you can make significantly higher profits on stock/currency or other financial movements. Leverage, or “gearing”, means that you make trades with a net value significantly higher than the amount that you deposited. For example, if I deposit £100 than I can take up positions offering me returns of up to £1,000 or even £2,000 (depending on how far the market moves). Usually most financial spread betting platforms will offer a margin of 10%. This means that if you deposit £100, you can actually risk up to £1,000 in market trades and transactions.
Because spread betting involves trading on margins, it also allows you to make higher profits from individual stock movements. For example, let’s say that you deposited £10 and wagered £10 per point on Microsoft stock. If the stock rises from 150p to 160p than you will make £100 profit. On the other hand, if you actually invested in Microsoft stock outright, by buying £100 worth of shares, than you would have only made around 7% ROI (£7 profit).
As you can see in this spread betting vs ordinary share trading example, you can make far more short term profit by speculating on stock movements by trading on margins, as opposed purchasing financial instruments like shares outright.
Finally, the advantages of spread betting is that anyone can do it and nowadays spread betting platforms allow you to bet on an array of markets. You can speculate on the currencies/FOREX markets, bonds markets, stock markets like the FTSE 100 or German DAX, or even commodities markets by spread betting on the price of sugar, gold or crude oil for example.
The majority of spread betting platforms also provide a range of orders to help you to minimise your financial exposure. You can execute stop-loss and limit purchases for example, which limit your losses by automatically closing your account if your stock drops below a certain figure (usually 10% in value).
To begin spread betting and open up a demo account to understand how it works, view our recommended spread betting platforms .

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You are here: Home > Learn Spread Betting: Training Course > What Else Makes it so Popular? Advantages and Dangers
F inancial spread betting comes with a number of benefits. Profits from spread betting are tax-free, because they are classified as bets – although the industry is still regulated by the FSA, as opposed to the Gambling Commission. However, even without the tax advantages (which incidentally means that you don’t have to maintain paperwork!), spread trading has a number of things going for it. Here are some of the benefits and advantages of spread betting -:
“Spreadbets and CFDs were designed as a tax arbitrage product and are extremely effective in doing so.”
Finally, betting on share price movements promotes the devil in you. What I mean by this is that you change from being an owner of a tangible business who perhaps keeps up to speed with developments from time to time whilst getting on with your ‘normal life’. Spread betting and CFDs cause you to obsess over every ‘indicator’ and every news item, which is not at all conducive to good health or sanity.
“In spread betting, you can also customise your bets and exposure to your means. If you want to trade £200 a point, if you’ve got the money in the account, you can do that; or you can trade £2 a point – and anywhere in between. Spread betting providers may even allow spreadbets of up to £10,000 a point providing уου have sufficient trading capital in уουr account tο cover potential losses.”
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