The benefits of spread betting
Spread betting has many advantages over traditional methods of investing such as share trading.
Tax and commission free
The important distinction between share trading and spread betting is that you don't physically own the shares when you spread bet. Instead, you bet on the performance of the share price. Therefore if you are a UK resident you are unlikely to pay capital gains tax or stamp duty on profits you make, stock broker’s commission or any account fees, which can be a big saving for traders.
Profit when markets fall as well as rise
Financial spread betting is advantageous as you can profit from a falling market just as easily as a rising market. It does not matter which way the markets are going, you can back your judgement either way. Visit our Spread betting example for more details.
Access to global markets
Spread betting is not only about trading on share prices; as a trader you have access to thousands of instruments including global indices, commodities, sectors, bonds and currencies. Our range of markets section will give you a full list of our tradable instruments.
Margin trading
One of the key advantages of spread betting is that it offers ‘margin’ or ‘leverage’. This means you can make a bet without the need to put down the full value of that transaction as you would with a stock broker. Consequently your funds are not tied up in a single trade which means you can use the rest of your capital for other investments.
As a result, your potential risk and reward will be magnified. Although your profits may exceed those of a traditional share purchase, your potential for loss can also exceed your initial deposit should the market experience sudden movements. However, there are many ways of managing your risk with a range of flexible orders including stop losses, limits and OCOs (one cancels other) orders. These orders can be placed online and are free to use.
