| Edge Your Bets With Financial Spread Betting |
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| Written by John Peirson-Jones |
| Friday, 10 July 2009 11:24 |
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Although the stock market has been responsible for making more than a few people rich. The majority of people who dabble in this market lose. Financial spread betting is a way in which a trader can speculate on the price of shares and stocks, and do this without the aid of the middleman, namely the stockbroker.
Although the stock market has been responsible for making more than a few people rich. The majority of people who dabble in this market lose. Financial spread betting is a way in which a trader can speculate on the price of shares and stocks, and do this without the aid of the middleman, namely the stockbroker. Speculation on the movement of stocks and shares when you don't have to pay commissions to a broker has its benefits. It basically means that the trader makes more profits. The trader is required to place a wager on financial markets and if the prices of these will increase or fall. The "spread" refers to the "Sell/bid or Buy/offer price. These prices are calculated based by adding more points to the live market price of the product (financial) and this is the estimated future price. This price is quoted by the spread betting company. An example of this is if the Daily FTSE trades at 4729, then the company will quote figures of say 4727 - 4731 and the trader places a bet on this price. It only requires a very small deposit to open a new position or account, this can be as small as dollar, euro, pound10 - 40. The bet is 1 on each point direction in which the market moves, this point is referred to as a tick. Once the trader has decided where they want to place a bet, they do this and this stake represents per tick movement in either profit or loss. Maximum stakes are different according to each financial market, but the wager is on whether the market price increases or falls. Once the wager is placed, if the bet was on a market increase, the spread better makes a profit. If the market falls, they make a loss. This loss can be substantial if the market drops substantially as the amount of ticks or points the market moves downwards is multiplied by the bet which was placed. By the same token if the market moves in the direction forecast by the trader, the points' movements are multiplied by the amount of the wager. So you can see why profits can be made. It is very important that the trader understands that in as much as profits can be made, losses can also be incurred and it is not only a case of losing the wager amount, it is multiplied. Because spread betting is considered to be a "bet" in the UK, and profits from this system of wagering do not have to be declared to the Tax Man. They are neither subject to Income or Capital gains tax. Any spread betting company should provide a new trader with a demo account. This is because they need to learn what goes on in the market, before they risk any money. A demo account mirrors what a live account does and is generally offered with a beginners guide. Being exposed to the spread betting system with no risk involved is the best way to learn all about it. Only once the trader is confident that they have the concept firmly in their grasp should they consider opening a new position in a live account. Make sure the company you choose provides a demo account and beginners guide! DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Before engaging in Financial Spread Betting Strategies, seek out the authors review on ODL Markets Trading Grab a totally unique version of this article from the Uber Article Directory |