Are you ready to learn about financial spread betting? Do you think spread betting for you or you just think financial spread betting is a fancy name for betting? Explore the possibilities and benefits of spread betting and trading.
In stock market, when you would like to deal in the traditional shares, then you go to stockbroker and he may quote you 2 prices. Lower of two prices that is one you may get in case you are selling the shares, is named bid price. Higher quoted price is what you may need to pay in case you are purchasing the shares, also is an offer price. Difference between two prices is named the ‘Spread’.
In the spread betting principle is precisely same, 2 quoted prices, bid & offer. In case you believe that the share may go up, and then you buy at offer price – higher of two prices quoted. In case you think that share will go down then your bet may start at bid price – lower of two figures.
In order to make the profits you have to cover cost of spread. When you have put a buy bet then you are not in the profit unless sell price has increased higher than price that you bought at.
While you place the bet you are asked how much that you would like to wager on per point or else per penny. Example in case you were betting on UK share say “£10” then you stand to win, or else lose, £10 for every penny UK share price changes.
Tip for the beginners: £10 might not sound much but keep in mind that you stand to make and lose this for each penny stock might change. If share suddenly soars and slumps on the announcement, then you can soon be sitting on large gain or large loss. In case you are new to this particular game, then start small & build from there.
All this bet stands unless you select to close that – by for instance going back to the spread betting broker & taking latest bid or else offer price available. One more handy tip is you can make use of stop loss, where you will not need to watch market each second, however can set up the price at which you close out your bet.
Still a little confused? We know that concept might be difficult in order to get head around but some simple examples may help.
Reality is that in case you know what you do, the spread betting is not scarier than trading through normal broker. Once you ‘get’ the spread betting then you may wonder why you did not think of making use of it sooner.
One of major features of the spread betting is that any of o the gains that you make are at present free of the capital gains tax.