What is spread betting?

Spread betting is a type of trading that allows you to speculate on the future price movement of thousands of financial markets, like the UK 100, with the aim of making a profit.

And, because it’s a derivative product (i.e. spread bets derive their price from the underlying market), there’s no need to own any of the underlying assets. For instance, you can trade on the price of crude oil without needing to actually own any barrels of oil.

You can also spread bet shares, indices and forex pairs.

You can spread bet regardless of whether market prices are moving up or down. This means that there’s still the potential to make a profit during volatile market conditions or when prices are falling.

For example, go long (or ‘buy’) and your profits will rise in line with any increase in price. Go short (or ‘sell’) and your profits will rise

in line with any fall in price.

Equally, if you go long and the underlying stock price subsequently falls, your losses will increase with every drop in that price. And, it also follows that if you go short but the price rises you’ll also incur a loss for every point the price moves against your position.

Spread betting is a margined product

This means that you only need to deposit a small percentage of the full value of your position but can still gain access to the same market exposure. So, the potential profits and losses from your initial capital outlay are higher than in traditional trading.

The margin needed in order to trade is typically between 1% and 10% of the total value of your position, depending on the market.

At Finspreads, we offer prices on over 12,000 spread betting markets. See our range of markets page for more information.

Source: www.finspreads.com

Category: Forex

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