Why Spread Bet?

Sharky

Admin
5,641 433
OK I thought Id kick off this forum with a discussion about why you might consider spread betting over other forms of financial trading. Here are a few reasons why you might consider opening a spread betting a/c. Be aware this is just food for thought and none of it is intended as financial advice! On with the show..

No Fees

You can forget broker fees, stamp duty and capital gains tax. The only cost in spread betting is the spread, and thats all you pay!

Selling Short

Clearly spread betting gives you the ability to sell short which is invaluable when the market is falling or to maximise your returns from the cycle of peaks and troughs in a sideways market.

Hedging

Hedging enables you to limit risk in a cost effective way. As an example, you might have a large exposure to the uk stock market, but your'e worried that theres weakness in the market and its due for a fall. If you decided to sell your shares and buy back later, then you incur all the costs involved. Instead you could place a down bet against the ftse 100 for example. And if the market were to fall then any loss in your portfolio would be offset by profit from your spread bet.

Leverage

Even with a relatively small amount of risk capital you can gain a meaningful exposure to the market. This can of course work both ways you can make and lose a great deal of money if your not careful, but there are ways to limit this risk such as controlled risk bets or stop loss bets.

Diversification

By allowing you to bet on an index rather than just a share, you can gain instant balanced explosure to the market.

Range of Markets

Gives you more choice by enabling you to bet across the financial markets as well interest rates, currencies, commodities etc.

OK well thats just a few ideas from someone who's just started out spread betting, I'd really welcome any comments from more seasoned traders to find out whether spread betting really is a viable alternative to other forms of financial trading. Also worth visiting is our new spread betting chat room #trade2win-sb. You can access this room from any of our other rooms just by typing /join #trade2win-sb

Sharky.
 

titus-uk

1
291 5
Interested...

Have been thinking a lot about this recently... after all, in trying to go long in the traditional sense, means I am always fighting the trend at the mo - a recipe for disaster. Will be interested to hear what others who do spreadbet have to say on the manner....

Mark
 

Mooringsman

Junior member
29 1
Sharky,

Can you give an example of a spread bet and where you set your stop loss and how the actual share price compared at the time?

Does it matter if you disclose to the spread betting company whether you are buying or selling when asking for a quote and does the size of the bet affect the quote?

Sam
 

momoney

Junior member
13 0
Never give any hint of what direction you wish to go in, you're asking to get ripped off.
Remember the incentive process for the person on the phone, is to win sales credit (commision) :eek:
 

bonsai

Veteren member
4,106 11
a few more thought

1- Spread betting is free of Income Tax
2- One stop shopping.- I can trade all the instruments I want at the one counter
3- 24/5 Open hours. I dont have to be exposed overnight. I can open/close at a time of my choosing not LSE's
 

momoney

Junior member
13 0
We should remind everyone that the income tax is replaced by a gambling tax which is actually a higher bracket for most people!!

An investment bank has a bid-offer of 1 cent on an interest rate future
Through a 'SB' service the bid offer can be up to 8 cents on that same product
Competition is slowly driving this down, but do remember you are being taxed heavily
within that bid offer spread

Access to products is fantastic though I agree
 

donaldduke

Experienced member
1,665 257
The only reason why i SB is because of the tax free status.
If it wasnt because of this i wouldnt bother.

The main disadvantage to SB is ofcourse the wider spread. If you research active trading systems
you find that some dont work nearly like aswell when using SB because of the higher transaction
costs incurred.

However all long term trading systems (eg long term trend following ones) should work just
aswell via SB as they would with Futures, and because SB is tax free you get the 66% extra in
profits!
 

momoney

Junior member
13 0
Guys I'm confused by your replies....
Spread betting is seen by the authorities as gambling,
are you guys saying there is no tax here??
 

luckystrike23

Active member
120 3
momoney visit financial-spread-betting.com - it should help you a lot it you have time to read lol
 

Robertral

Well-known member
446 4
momoney said:
Guys I'm confused by your replies....
Spread betting is seen by the authorities as gambling,
are you guys saying there is no tax here??

Spread betting is TAX free...........remember that!!!!!!!!
 

elliottmillion

Junior member
29 0
spread betting is completely TAX FREE. you don't have to tell the inland revenue anything about it!!!

i know this for a fact.

"Guys I'm confused by your replies....
Spread betting is seen by the authorities as gambling,
are you guys saying there is no tax here??"

Anyway, GORDON BROWN abolished gambling tax some years ago. but you didn't have to pay any tax on it when there was gambling tax anyway.
 

darktone

Veteren member
4,016 1,084
Theres been no real negatives posted about spreadbettung here so far (unless ive missed it :cool: )

so :-
1) Very basic trading platforms, inc poor charts.
2) Poor trade execution at market and orders.
3) By and large poor customer service, especially in the event of a dispute.
4)This last point may a personal thing, but when in dispute i always get the feeling they try and sway to their favour. Ok not a prob if you've experience (and screen shots :LOL: ) but can be very disconcerting for a noob.
 
 
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