If you have just started exploring your chances in the currency market, you might as well have come across the term “spread betting”. However, do you understand the meaning of the term or what it actually entails? Today, we are just going to dig out answers to these questions. Do read on in order to be duly informed.
What is Spread betting all about?
Spread betting is often discussed as a simple and cost-effective way of earning profits in the financial market. Most of the traders out there treat this trading option as an alternative to traditional trading. As against conventional trading you can make profits irrespective of the rising or falling prices. It is simply a bet where every price movement multiplied by the size of the stake bet leads to either profit or loss. Needless to say, the trader does not have to own the financial instrument.
Benefits of Spread Betting
There are not one but several reasons why spread betting has emerged as such a favorite trading option today. We will explore the same in the course of the post.
The range of markets that you can access with spread betting is amazing to say the least. You can end up gaining exposure in both the global and domestic markets.
This remains one of the major reasons why people love spread betting. The bets on the price movement you end up placing are tax free. Since you are not buying or selling the underlying market, you are not really required paying any stamp duty. Besides taxes, there are no prohibitive fees associated with spread betting as the quoted prices themselves include everything. This is one of the reasons why spread betting is cost effective.
Spread betting involves beneficial leverage
You can go on to use only a portion of the total value of your position and end up gaining considerable exposure for the underlying asset. You can actually go on to open positions with any amount of money thereby magnifying the yields. However, please remember that high leverage is often regarded as a double edged sword, since if it is not managed properly then it can actually result in major losses, as well. Since spread betting enables traders to go both long and short, they can actually make profits irrespective of whether the market is rising or falling.
Spread Betting: What exactly should you be aware of and why?
Please make sure that you are educating yourself more about spread betting in general so as to bolster the odds of winning. Do not forget that it is, at the end of the day, a risky business. If you are not serious about placing your bets only after studying the market thoroughly then it will not really be possible for you to reap dividends in accordance. You can turn to reliable online spread betting guides for help. If you are willing to find out more about spread betting then you can refer to CMC Markets. All the best!