What is Spread Betting?

What is Spread Betting?
Trading is a very complex and, at times, a fun business to be in It might be stressful and intense at times, but the payoffs can be great and it certainly beat sitting in a gray cubicle all day Whether you are looking to trade bonds, dabble in the stock market or take on spread betting, the odds are that you are going to enjoy your time way more than you would as a marketing specialist or content hack at a Fortune 500 company

Outfits like ETX Capital are set up to be major players in the spread betting industry.

But it may not be very familiar to most laypeople or even to a large portion of investors and traders

Spread betting is a very specific form of trading.

Basic stock market trading is pretty straightforward; you want to buy a stock at a low price and sell it when it is high A trader can speculate on the direction a price might go for a number of different financial markets and instruments At its core, this is a derivative financial product, because the trader never owns the actual asset It is all about trying to figure out where the price is headed
Every market has a bid price and an ask price The spread is the difference between those two prices Traders can bet on the spread in forex markets, commodities, equities, bonds and plenty of other financial markets Your provider will quote the spread and you make the call as to whether the price of the underlying asset, whatever it is, will rise or fall To be sure, the prices change rapidly in this sector The market is global and always responding to news, investor mood changes and whatever other factors affect market conditions READ 5 Strategies for Effectively Monitoring Your Remote Workers
Let’s say you are looking at the one bond index If you think the price is going to rise, you can bet a certain amount per each point you think it is going to go up You can keep the bet open ended, or you can put a time limit on it Every time the price moves a point up, you earn multiples of your stake, all depending on what the house gives you for odds If you bet $10 a point on that bond index rising in the next 3 days, and it rises 150 points, you get $1,500 But if the market moves against you and you start to lose points, then you suffer the losses

What is nice is that there tend to be no fees on these types of bets.

There are rarely commissions or overseas duties to pay on your profits and in the United Kingdom, these bets are even free from the tax man
One of the most important things to keep in mind for traders in this space is that because this is a derivative play, you don’t actually own the asset So you can make money from the price falling As long as you make the correct call in time and you bet on the price falling, you can make money in a tumbling market
Keep in mind, though, that leveraged trading is very common in the spread betting world While that allows traders to take large position on relatively small price movements and make a profit, the risk is quite high When you trade on margin, you want to be able to back it up If you cannot back it up, you will lose lots more than just your shirt You always want to be sure of your abilities when you are playing in this game

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