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Welcome to our introduction to Spread
Betting
Is it a gamble, is it an investment? I will give you a clue: There is no stamp duty to pay and there is no tax on capital gains... This means that for some governments it is not an investment, it is gambling... Are you a bit of a gambler at heart? If the answer is yes, you are not suitable for spread betting. You will lose everything... The probabilities are against you. To keep it short and simple, the probability of losing money is greater than the probability of making money. If you understand technical analysis and fundamentals and then use spread betting, it is possible to make money. What is spread betting? Instead of buying or selling shares, you are betting on the shares to go up or down. It is one thing to bet something is going to go up or down... and another thing to but shares. So, why bother with spread betting? 1. You can go short and make money when share prices decline. You like bear markets and bull markets the same. If you believe that the market is going to crash you can go short. 2. It is tax free. No capital gains tax because it’s considered to be gambling. 3. You can use leverage and trade on credit. Spread betting firms give you margin and let you buy shares on tick, as they make a profit out of every trade. 4. You bet on indices. (VERY difficult and dangerous, can be very profitable after bad news). 5. You bet on commodities. Gold, oil or sugar? So, it is great! Not really. There are no profits where there are no risks. Note: We neither advertise nor earn commissions from the trading and investment products we discuss. We do not recommend specific firms. We do not collect information about visitors. Risks of Spread betting 1. Losses can be unlimited. Without a guaranteed stop loss when opening your bet, your losses aren’t limited to your stake.Example: You believe that the shares of company X are going up and you want to go long (to buy) ... The spread betting firm gives you a price, 200-202 (200 to sell and 202 to buy). So, first decision - you buy at 202. Second decision - how many pounds a point you want to stake. You bet at £50 per point (very high, very dangerous). If the share goes one point up, you make £50. If the share goes one point down, you lose £50. If the share price goes up to 222 at bet expiry, then you make £50 x (222 – 202) = £1,000 If the share price falls to 192 at bet expiry, then you lose £50 x (202 – 192) = £500 If the share price falls to 102 at bet expiry, then you lose £50 x (202 – 102) = £5,000 If the share price falls to 2 at bet expiry, then you lose £50 x (202 – 2) = £50,000 If you bet at £100 per point, you may lose £100,000 Did you see that? It is possible to lose much more money than you invested or imagined possible to lose. Your loss is not limited to the amount you invested. If you use leverage, you may lose everything you have. Many spread firms allow us to trade with only 10% upfront – so you can bet 10 times more money ... and leverage is deadly when the market moves against you. --------------------------------------------------------------------------------------------------------------------- This website should not be considered as a solicitation or offer to conduct investment business in any jurisdiction. Investors residing in all countries should make sure that they do not infringe local financial regulations. They may only follow my thoughts (not recommendations) once they have ascertained that doing so will not result in such a violation. The information contained on this website does not constitute an offer to buy or sell currencies, options, CFDs, futures or any other product. Investors should be aware that when buying or selling any investment whose price or value is subject to volatility and fluctuations, they may lose what they have invested and more. Past performance does not necessarily reflect future performance. The services and investments referred to on this website may not be suitable for all investors and before trading, you should seek independent advice from your qualified financial adviser. Derivatives, spread trading, options, CFDs and futures are EXTREMELY volatile instruments and in certain circumstances you may lose MUCH MORE than your initial investment. You should consult your financial adviser before trading. --------------------------------------------------------------------------------------------------------------------- Excellent Courses, Exceptional Venues The role that the environment plays in learning, solving problems and thinking out of the box is often ignored. 
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Our web sites about investments and compliance www.markets-in-financial-instruments-directive.com www.mifid-training.com www.mifid-board-directors.com For Hedge Funds and UCITS: www.ucits-iii.com www.ucits-iii-training.com Keywords Spread Betting, Contracts for Differences (CFDs), What is Spread Betting, What is Contract for Differences (CFDs), Internet stock investing , investing in stock, investing in stock market, online stock investing, online stock market investing, online stock trading, online trading, stock investment, stock market trading. ------------------------------------------------------------------------------------------------------------------------------ |
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