Financial Spread Betting - 7 Advantages

1. Easy to pick up

Financial spread betting is based upon a simple concept of betting a stake per point. This system works for all of its related markets. It may seem tricky at first but after you have run through a few examples you will see how easy it is to pick up.

2. Low Starting capital requirement

You don't have to be rich to start. You can start of with a few hundred pounds in your account. Unlike share trading there is no commissions so this means you aren't penalised for smaller trades. The costs are included in the size of the spreads which are the same size no matter the size of your trade size.

3. Diverse Markets

You can trade in a number of different markets from one financial spread betting account. Markets include individual equities from home and abroad, indices trading, currencies, commodities, house prices, bonds and interest rates. The technical element works in the same way over each of these markets, you place a stake per point.

4. Going short

It you only two positions are long or neutral then you could be leaving a lot of money on the table. Bear markets make people very rich and financial spread betting allows you to take full advantage of that. You can also use shorts as a way of hedging your other long positions.

5. No Tax To Pay

Currently, you don't have to pay tax on any profits you make and you don't have to pay stamp duty when you buy. If you are making profits then this is a massive benefit to you especially if you are making profits in excess of the capital gains threshold. Remember though that this may change in the future so check the tax laws on a regular basis.

6. Eliminates currency risks

When you buy securities in countries that use a different currency than your own then you are always have a double risk because of the currency exposure. With financial spread betting you make money on a point by point change and the currency that the security itself is trading in doesn't make any difference. Obviously there are occasions when you do want the currency exposure and in those cases you can use financial spread betting to easily expose yourself to other currencies.

7. Power of Leverage

Now you should always be sure to understand the risks when it comes to leveraging your position. That is because you can lose more than your initial stake. But when used correctly, financial spread betting is a great way to benefit from leverage. Small margin requirements mean that your profits (and losses) are amplified.

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