Spread betting finance provides you with an opportunity to make good money without paying any tax on the winnings. Financial spread betting is a leveraged trading that offers you a chance to trade the financial markets without taking ownership of the primary assets. Traders and investors have the superior buying power that leads to potential high returns in spread betting. The worth of your money will be leveraged irrespective of the financial market that you are interested in, whether shares, commodities or even currencies and you can access all these markets from one account. You don’t need to own any of the shares that you are trading but simply trading on the direction of the share price whether it will go down or up in spread betting finance due to its derivative trading form. Traders who win in spread betting tend to have a spread-betting game plan unlike the losers. It’s advisable to build your trading strategies to help you trade in spread betting.
How to bet on the financial spread
If you are interested in betting on financial security you can trade with any amount. If for example you place 20 euros per point and you think the price of petrol is going to increase, you could place a bet at 16594, the ask price and very point increase or decrease will transform into a 20 euros profit or loss. Say you are lucky and the market rises to 16614, which is an increase of 20 points, your winnings will be 400 euros due to that 20 point movement.
Benefits of financial spread betting
Some of the benefits of financial spread betting that you can get at online trading companies like CMC markets are: access to a different range of markets, the winnings are tax free, there is an option to either take a long or a short position and there is a low barrier to market entry. Financial spread betting provides you with an opportunity to make profits while using little investments. The lack of no commissions or brokerage to be paid also increases your profit. Traders can bet on different markets including stocks and bonds. Spreading betting is gaining popularity in the UK and it’s absolutely legal.
Tips in financial spread betting
Follow the trend
It’s the most common strategy used by traders and especially new traders. The strategy includes looking at the force of the security to predict the possible future direction of the trend and its ideal entry points.
Limit the number of markets you trade:
Choosing a couple of markets to trade like forex and trade on it only you are likely to make more profits. You need to learn how the markets work and understand how prices move. Build a connection with markets you choose to help you stay on the winning side.
Decide when to enter and when to leave: If you already have a possible spread bet from your trade setup, you now need to decide when to enter the trade. Good entry points could be when the price crosses a moving average or when it sidesteps the high or low of the last number of bars.
Never risk too much on your account
To win more in a spread bet, I recommend you keep your risk low especially if you still learning the trade. If you are not sure of how much you could lose on a spread bet then I recommend you keep it as low as possible.
Reasons why most people lose in financial spread betting
Predicting the future is quite difficult. It’s the main reason why most people lose.
The betting structure also put traders on a disadvantaged side, traders buy and sell shares depending on a spread around the actual price. A share trading at 100% may need to be bought at 101%, where your winnings and losses are calculated. You are likely to win nothing if the shares go up by 1% and you will lose 2% share if it goes down by a penny.
Another reason why people lose, buying shares in the traditional means may offer investor profits via dividend which will need to be considered in any profit calculation. In spread betting, there are no dividends making many people to lose money.