Spread Betting and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.8% of retail investor accounts lose money when trading Spread Betting and CFDs with this provider. You should consider whether you understand how Spread Betting and CFDs work and whether you can afford to take the high risk of losing your money
Is Spread Betting For Me?
Spread Betting is a trading method that may appeal to individuals who understand and are comfortable with the risks associated with trading.
Spread Betting offers the potential for higher gains compared to traditional direct share trading due to the use of leverage (though this means losses can also be amplified too). Traders can also utilise risk management tools such as Stop Loss and Limit Orders to control the amount of risk they are willing to take.
It is important to note that spread betting, like any form of trading, does not guarantee profits. There is always a possibility of incurring losses.
One key difference between Spread Betting and share trading is the lower deposit requirement for spread bets. As a leveraged product, traders are only required to provide a percentage of the full trade value as their capital outlay or margin. With share trading, you are buying the asset. With Spread Betting, you are betting on where you think the price of the underlying asset will go (without actually owning the asset).
Nevertheless, it is crucial to remember that while the initial margin may be low, potential losses can exceed the margin. Traders should carefully consider their risk tolerance and financial situation before engaging in spread betting. It is advisable to manage positions prudently and have a clear understanding of the potential risks involved.
Spread betting has a number of advantages over investing in shares:
- No capital gains tax – on any profits you make1
- No stamp duty1 – on your Spread Betting transactions
- Potential to profit when values rise or fall – with share investing you only profit if the price of the share rises
- 24 hour trading – in global forex and bullion markets
- Lower cost of entry – no stamp duty1, no broker commissions and low margins means your capital outlay is far lower than share trading
Spread Betting vs buying shares
Indeed, buying shares is generally considered a long-term investment strategy. Investors who buy shares in companies or invest in funds like OEICs (Open-Ended Investment Companies) typically aim to hold their investments for a longer period, often several years, to benefit from potential capital appreciation and dividend income.
On the other hand, Spread Betting is designed to take advantage of short-term market movements and volatility. With Spread Betting, traders can speculate on the price movements of various financial instruments, such as shares, indices, currencies, and commodities, without owning the underlying asset. The objective is to profit from short-term price fluctuations, which can occur within days, hours, or even minutes.
Spread Betting provides the opportunity for quick gains based on short-term market movements, offering flexibility and the potential for active trading. However, it’s important to note that spread betting involves higher risks compared to traditional share investing. The potential for quick gains is accompanied by the potential for quick losses, as the leveraged nature of spread betting can amplify both profits and losses.
It’s essential for individuals to consider their investment goals, risk tolerance, and time horizon when choosing between buying shares for long-term investment and engaging in spread betting for short-term trading. Seeking advice from financial professionals and conducting thorough research can help individuals make informed decisions based on their specific circumstances and objectives.
Spread Betting and other assets
Spread Betting indeed offers the advantage of accessing a wide range of markets beyond company shares. Traders can engage in spread betting on various financial instruments, including indices, currencies, and commodities. This provides opportunities for diversification and the ability to capitalise on different market trends and opportunities.
By trading on indices, currencies, and commodities through Spread Betting, traders can potentially generate tax-free profits in certain jurisdictions, subject to local tax laws. This tax advantage can be attractive to individuals looking to optimise their investment returns.
Spread Betting platforms, such as the ones provided by Spread Co, are designed to offer powerful and user-friendly trading experiences. These platforms provide real-time market data, analysis tools, and execution capabilities, allowing traders with varying levels of experience to access and trade these assets effectively.
Whether you are an experienced trader or a beginner, Spread Betting can be an appealing option to trade a diverse range of markets, leverage tax benefits, and utilise advanced trading platforms. However, it’s essential to be aware of the risks involved, manage your positions effectively, and continuously educate yourself about the markets you choose to trade.
Spread Betting with Spread Co
When you Spread Bet with Spread Co you’ll also enjoy:
- Tight, fixed spreads – which can be as low as 0.8*
- No overnight financing – when you go short on indices
- Wide range of markets – including forex, indices, shares and commodities
* For Spread Bets in hours spreads for Index bets up to £50pp, EURUSD 0.8 all trading sessions
Tax laws can change and depend on individual circumstances, tax laws may differ in a jurisdiction other than the UK.
Easy To Open An Account
Reliable Platform
With our platforms you can trade wherever you are – at home, in the office, or when you’re out and about.
0% financing on short index positions
Some companies will charge you to hold a short index position. At Spread Co we won’t.
Powerful Charting
Spread Co charts are powered by TradingView Inc.
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