Spread Betting Review

ADVANTAGES OF SPREAD BETTING

Why Should I Start Spread Betting?

Spread Betting trades offer a number of advantages for both new and experienced traders as tax incentives are available for profitable transactions and global market exchanges can be accessed from a variety of sources (and for a variety of different asset classes).

 

1. Spread Trading Tax Advantages

When placing Spread Betting trades as part of a portfolio strategy, one factor that should be considered is that any financial gains made from these transactions will not be subject to tax obligations. Stamp duties will not be collected, so this additional gain should be viewed in terms of its ability to increase your account profit & loss in ways that cannot be matched in other forms of investment.

 

2. Ability to Access a Variety of Asset Classes

In today’s trading environment, there are many different types of trading instruments that can be access from your computer’s Spread Betting trading platform. These will not only include the most popular stock indices (such as the FTSE 100, DAX, CAD and S&P 500) or forex currency pairs (such as the EUR/USD, USD/JPY and EUR/GBP) but also commodities instruments and more exotic forms of the most commonly traded equities and currencies. This can include instruments like the Brazilian Real and Swedish Krona (in forex) or Wheat, Orange Juice, or Platinum (in commodities). This is by no means an exhaustive list of available instruments as there are literally thousands of other options traders can choose when looking to establish a new Spread Betting trade.

 

3. Controlling Exit and Entry Levels with Stop Losses     and Profit Targets

Spread Betting trades can (almost always) be opened and closed at the trader’s discretion. This flexibility enables Spread Betting traders to close a position once it has reached a profit or when losses have reached your negative threshold. These trades can be structured before the trade is actually opened or during the time the position is being held. This is an important point to remember as market conditions can change at any time and traders need the ability to control their positions to adapt to these potential changes.

 

4. Taking Opposing Positions

One way that Spread Betting is different from traditional investment is that traders can actually bet against a market (if the outlook is negative) and make gains if the price of the asset declines. In addition to this, a trader actually has the option of taking a “buy” and “sell” position at the same time as a way of hedging against market volatility.

 

5. Added Flexibility

This flexibility can be invaluable to Spread Betting traders because it will enable you to tailor your market views (either positive or negative) to your actual position entries. If, for example, you feel the EUR/USD will soon be entering a downtrend, you can bet against the price movement of that currency pair and you will make gains if prices see later declines. This flexibility is extended to the other asset classes as well, and can be used when trading stock shares, broad indices, and in commodities.

 

6. No Commission Fees

For the most part, Spread Betting trading providers do not charge commission fees or brokerage charges. This is another small advantage of spread betting that can have a positive influence on your account’s profit & loss counts.

 

7. Spread Betting Markets Never Close

Spread Betting markets are constantly changing and most of these markets are open 24 hours a day. This allows traders to manage their positions at any time and make adjustments if financial market news changes the short term outlook. In many cases, Spread Betting trades can be opened and closed even stock and futures have closed for the day.

 

8. Risk Management and Limited Losses

As a measure of protection, Spread Betting brokers allow traders to set orders that limit losses to a set percentage. If for example, you are willing to risk 2% on any given trade, you can put in place a “stop loss” order, which will automatically close the position once this loss threshold is reached. If prices move in an unpredictable fashion, these stop loss orders can prevent large account losses that are unmanageable.

 

9. Free Market Analysis and News Feeds

Most Spread Betting brokers offer detailed news analysis and technical chart forecasts to the traders using their platform. This information is essential for all traders (especially new ones) and is one advantage that sets these companies apart from most traditional investment companies.

 

Read our spread betting broker reviews before choosing a broker:

Broker Reviews

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