Popular, Legal Spreadbetting in the UK
Another name for spread betting is CFD or Contracts for Difference. Spreadbetting allows people to trade on price movements in financial markets, and you can spread bets to speculate on price movements regardless of whether the markets are rising or falling.
High Risks and High-Profit Potential
Spread betting is popular and legal in European countries but not in the United States. Its appeal comes from the fact that comes with high risks but its offers high-profit potential. Spread betting is traded on margin, and this means that spread betting doesn’t require you to put up the full value of the underlying exposure you take.
Because you don’t own the actual investment, spread bets and CFDs are known as financial derivatives. To place a bet, you only need to hand over a deposit. You have the chance to make profits with only a small outlay, but you need to know that you can also lose a lot of money if prices move in the wrong direction.
You can trade on the likes of currencies, commodities or stock and you wager on which direction these assets will move.
As an investor, you don’t own the underlying asset – but rather you speculate on its performance. The beauty about spreadbetting is that you don’t pay Capital Gains Tax on your profits or winnings as spread betting is considered as a form of gambling.
There’s no Tying up Huge Sums of Money
The beauty about spread betting is that you can gain exposure to a financial asset or market, without tying up huge amounts of money. In fact, the deposit an investor has to put down is just a fraction of what it would be to buy the assets directly.
Historically, CFD products were marketed to financially sophisticated retail investors, but these days it targets retail clients too. The number of clients in retail CFD products is estimated to be thousands upon thousands and there are many authorised firms whose primary activity is selling and distributing CFD products to retail clients.
Make Good Decisions
If you want to enjoy successful trading, it means at least making some good decisions and the first one would be making your brokerage decision a good one. Go with a trusted, registered brokerage which offers thousands of markets on an award-winning platform. The most popular are individual shares and indices, but currencies are also popular, and currency pairs, including UK sterling, US dollar, the Japanese Yen and the Euro are the popular currencies with UK traders.
As one of the leading providers of spread betting in the UK, CMC Markets offers competitive spreads for the many investors who opt to spread bet on the financial markets. This is also because spread betting has many benefits when compared with buying physical shares –
- You’ve got access to 24-hour markets
- You can trade on margin, which means you only need to deposit a small percentage of the overall value of the trade to open your position
- You can trade on global share markets as well as commodities and currency pairs. In fact, pairs trading is a strategy that can be used with spread betting and CFDs. You buy an undersold asset and sell an overbought one, making a profit on both positions. You can pick any pairs you like. Ideally, both these positions will make money. ,
- Spread betting is risky business and the risks can be quite high. This is precisely why spread betting companies offer a demo account for new players. They’re free to set up and they also don’t require a deposit.
Making use of virtual money, you can spread bets the way you would with a real account, but you have no risks. Once you’re familiar with the basics of spread betting, setting up a real money account is simple and deposits can be made with a small amount. It is always recommended to sign up for a risk-free demo account first and to also keep current with the latest news of world events because these influence market prices.
Spread betting and traditional market trading are fairly similar, but there are one or two key differences. Transactions with traditional market trading have a cost attached to them, while transactions in spread betting don’t have a cost attached. With spread betting, you can open as many positions as you like without having to pay any fees.
Rising or Falling – you can make a Profit
One of the most important benefits with spread betting, when compared to traditional forms of trading, is that you can trade on rising and falling markets. This is what gives you the means to make a profit regardless of whether the markets are going up or down.