The use of spread betting is regarded as a short-term investment, wherein bets are positioned for just a couple of days to have profit returns as quickly as possible. It is certainly not impossible and is practically doable as there can be substantial benefits over using traditional trading shares in terms of cost effectiveness and convenience.

It basically involves a lesser annoyance than the typical trading scheme and it will turn out to be a lot cheaper since the costs involved in the trade is carried out within the cost of hiring a broker. The dealing costs such as stamp duty and the minimum fee for each trace is packaged into one single cost which can be very convenient.

The use of spread betting will include the coverage of a quarterly bet which is tantamount to an exemption from tax. But as the case may be, subscribers should still regularly check their respective tax situation and since spread betting is a leverage product, traders are not purchasing the underlying shares because the capital outlay is always much lower than traditional share trading costs. Moreover, short – term bets that are intended for a few hours such as the FTSE 100 can often end up becoming macroeconomic trends in the long run.

Upon utilising the benefits of short-term betting, it is always a good idea to keep close eye on the moving market in order to get the most of the profitable shares around. Automated share price warnings can make the process much easier. On the other hand, when using long – term bets it does allow the trader to view a much broader strength of individual shares without worrying too much of the short – term fluctuations.

Spread betting is very comparable to share trading with the exception of the stop – losses mechanism made available in the former. For those who fancy the use of share trading they can ultimately use the techniques gained when using spread betting.

For a relatively small premium, traders can avail of the guaranteed stop – loss mechanism which removes the inherent risk especially in very volatile markets. The given position will be closed at the indicated level and will never go beyond the chosen level. For the short – term basis, it is a fairly good idea to set a narrow stop – loss limit so that any sudden market swings won’t be too devastating. With long – term bets it is preferable to set the limits within a broader range so that the potential profits can be as substantial as possible.

A summary of the advantages of Spread Betting

• Opening positions though leverage is possible without paying so much share price
• The risks are better controlled with the use of stop – loss
• Betting anyplace and anytime despite the unavailability of the market
• Existing share – trading knowledge can be used for betting
• Capital gains tax and stamp duty charges are excluded to pay on profits

Last Updated: May 3rd, 2013