What Is Spread Betting
In this article, we will explain everything you need to know about one specific trading vehicle called ‘spread betting’ .What is it, how it works, things to know when selecting the best spread betting platform? Let’s start!
Spread betting explained
It includes placing a bet on the price direction of a financial tool . Your profit, or loss, is set on by whether or not the market moves in your selected direction.
A spread betting trader never owns the basic product – they only consider whether the price increase or decreases in value. It is a leveraged product, spread betters can trade on margin . A trader only needs a small deposit of the total value of the trade to start a position.
How does spread betting work?
3 basic items make up a spread betting trade:
1- The direction of the trade
2- The spread of the tool
3- The bet size of the trade
Every spread betting trading ticket gives you the choice to either buy or sell, on a financial tool. If you think the market is going to rise in value, you would start a long (buy) position. If you think the market is going to fall in value, you would start a short (sell) position.
and Each one ticket demands a bet size or ‘stake’ size. The bet size is significant as the value is increased by every point that price moves in your favor – or not – to set on your profit or loss.
Selecting the best spread betting platform
When trying to spot the best platform, you should look for:
Whether the provider is regulated?
Do they let you start with a demo account?
Do they give access to other trading vehicles?
Is spread betting taxable?
For spread betting UK residents, one of the major advantages is that profits may be tax-free. However, tax treatment depends on individual situations, and tax laws are subject to change.
Is spread betting profitable?
Many traders will make spread betting profitable for them, and others traders will not – it depends on the individual. There are definite practices that traders may consider when striving for profitability. These include:
Have a trading plan: Will you be focused on forex, stocks, indices, commodities, or a combination of them all?
Test your trading strategy : There are several trading styles, indicators & strategies to choose from. Having the ability to test them in a risk-free environment is important to building confidence in your trading career. Whether it is a spread betting demo account or a CFD demo account it is basic to start on one. Read more
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