In recent years more and more people have turned to online financial spread betting. With the widespread use of fast Internet connections, it is perfectly possible for most people to take up spread betting online as a means of income, provided of course that they are prepared to take time to learn the markets.
Spread betting is a very recent phenomenon in trading terms, but trading is the practice with which it has most similarities, rather than betting. Betting usually involves an all-or-nothing wager on the outcome of a race or sporting event, with predetermined odds; spread betting has an almost infinite number of outcomes, depending on the movement of the underlying financial instrument, including losing more money than you have already staked if you bet unwisely.
Financial spread betting online allows you to speculate on the movement of a wide range of markets, including not just the traditional stock market and its associated indices, but many others such as currency exchange rates, commodity prices, etc. Yet starting in the world of online financial spread betting has a much lower entry level than most other trading pursuits, which makes spread betting online accessible to virtually everyone.
Online spread betting allows you to place a wager on a market price without ever having to own the security you are betting on. If you bet on stocks, this means that you do not have to pay any stamp duty, as you would if you bought and sold them. In fact, when you make a profit it is counted as winnings rather than a capital gain, with the result that in several countries such as the UK you do not even pay capital gains tax on the return you received.
What is more, you can spread bet on the stocks and indices from many different countries, which is not as easy to do with a traditional stockbroker. Even when you are betting on the German DAX or the American S&P 500, you place your bet in pounds sterling, at so many pounds per point, and your winnings are calculated by the number of points that the index changed in its own currency.
Online financial spread betting is convenient, and you can really profit as easily when a price goes down as when it increases. You either ‘Buy’ at a certain level, or ‘Sell’ at a slightly lower level if you think the price is going down, and wait for the price movement in your direction to tell you how much you have won. There are no fees or commissions for placing the bet, the spread betting provider’s profit comes from the spread, which is the difference between the buying and selling prices. In other words, once you enter the spread bet, you have to wait for the price to move in your direction by the amount of the spread before you break even and can start making a profit.
Taking all this into account, it’s no wonder that spread betting the financial markets has become so popular. The best way to see if you like it is to open an account, and start betting with small bets to see how it works.
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