There are many reasons why Financial Spread Betting is a great way to trade online. The first is that it is simple to learn. It may not look like it when you first start but once you get going it is really easy to understand the mechanics behind it.
You also don’t need a lot of money to get going with it. Because you trade on a margin you don’t need a substantial deposit in your financial spread betting account. This does make it risky which I will come onto later.
There are many different markets that you can trade in and better still you can trade them all from the same account. This means that you can quickly and easily switch from gold to shares in BP for example. The principles of financial spread betting work the same way in all the markets so switch between them is simple.
You can use financial spread betting to go short on any particular market or asset. This is a great way of making money in a bear market when everyone is panicking but it is also great for hedging your other long investments. Say if you are long on a particular asset but didn’t want to sell for tax reasons but you felt quite bearish about it, you could go short on it and cover yourself.
And if you made a profit, well there is no tax to pay. There is no tax to pay on profits and there is no stamp duty to pay. This is the great advantage of financial spread betting as it means that your profits will be that much bigger.
You also don’t have to pay commission to the financial spread betting company. They make their money through the size of the spreads on a particular trade. So if you are looking for value for money look out for a tighter spread.
Financial spread betting is risky because it uses leverage. If you do use it right then it is a great advantage. Use it incorrectly and you could end up in serious trouble. You can lose more than your initial deposit so make sure that you fully understand the risks before you start.