20/06/2011 - More About Spread Betting
Among the thousands of financial entities in the markets like indices, currencies, commodities and others, spread betting enables you to trade using this derivative product. A derivative is used for the speculation process on the stock market like the price movements regardless of the rise and fall of the it. The speculation is done by spreading your bets.
Spread-Betting.com is an educational spread betting guide that provides training and information on financial spread trading, as well as general news and trading updates. Article Source: http://EzineArticles.com/6282061
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Spread betting is exempted from paying the capital gains tax compared to the traditional share trading where the trader pays the taxes on the winnings. Spread betting is you pay no taxes on your winnings. Stamp duty is also exempted for this type of trading. Just like dealing with the Investors Gold Index in which you are not buying shares physically but positioning yourself for the rise and fall of the share, in which case, no stamp duty is obliged. It is a flexible form of trading allowing traders to monetarily gain from the rise and fall of the market shares through short selling. With this type of trading, the online platforms are just excellent and the profits are tax free. It is inexpensive to trade this way too.
Take note that spread bets are open ended and so are the losses. It is like betting $10 at 10:1 with a prominent street bookie in which you will win $100 with your $10 bet and loose $10 if you are down with your bet. In spread betting, the profit and the loss are open ended which is essential to understand in terms of potential losses. But losses can be taken cared of through the "stop losses". An example of this is when you buy stocks at 4200 at $1/share; tab your loss limit at 4180. If the stock market slides below 4180, it is an indicative signal that the stocks will automatically be sold for a loss. The stop loss command is triggered only when the value of the stock move through a certain loss point, and it is 4180 in this example. However, if the market hits 4181 and rebounds to 4200, the stop losses order will not be implemented since it did not reach the benchmark of your loss limit. The stop loss order is a good method to define the limit on up to where you want to dip your losses.
A short advice to the beginner in spread betting: Be sure to completely understand what you are doing before getting involved in it. This is not too complex to learn but there are loopholes that you must learn by experience.
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