Spread Betting Advantages

Before jumping to an abrupt conclusion about financial spread betting it is important to understand what spread betting is and what it isn't. First, let's start by looking at the benefits it can offer to traders and how to take the full advantage of what it has to offer.

The main advantages of financial spread betting over other products:

• Go Long and Short - unlike share trading (where you can only gain from rising markets), spread betting gives the ability to profit from rising and falling markets.
• No Stamp Duty - saving 0.5% compared to a traditional share purchase.
• Easy to Understand - no jargon and complex calculation as options and futures trading.
• Trade on Margin - you only pay a fraction of the full cost of the trade; therefore bets can be placed with relatively small initial outlay.
• Tax Free - financial spread betting is considered to be gambling (even though it's regulated by FSA) and thus, the gains are tax free in the UK.
• Range of Markets - individual equities, indices, commodities, forex and much more. Virtually every market is now covered by spread betting (tradable markets vary between the brokers).
• Instant Execution - all the trades placed are contracts between the client and the spread betting company; therefore there is no delay in routing the order which allows an instant execution in markets.
• Extended Trading Hours - some spread betting companies are open 24 hours a day which is not the case to normal market trading hours.
• No Currency Risk - brokers allow traders to place their bets in the currency of your choice, thus eliminating the risk of currency fluctuations.

Finally, don't forget to weigh the listed advantages against disadvantages covered in the next section.