Financial Spread Betting Explained
I want to briefly run through some of the advantages of financial spread betting. As with anything though there are always some disadvantages.
The first advantage and it is something that hear a lot about is that you don’t have to pay tax. In the UK, financial spread betting is tax free. That is great news for traders especially with the capital gains tax rise that is planned. You don’t even have to pay stamp duty.
If you don’t actually make profits then this will not be any good to you. In fact if you are making losses on a regular basis you need to weigh up if you should continue or not. Financial spread betting uses leverage and that is great when you do well, but can be really bad if you don’t.
With financial spread betting it is very easy to go short on an asset. A lot of people are either long or they are neutral. By not shorting assets you are potentially leaving a very large amount of profits on the table. Once you have gone short a couple of times you will feel more comfortable with the concept and it will become second nature to you.
There are lots of different markets for you to choose from as well. You don’t have to worry about being restricted to one area. This means that you can diversify and benefit from lots of different market movements.
You don’t have to worry about currency movements when you are trading stocks abroad. If you were interested in going long on General Electric but were worried about the dollard become weeker then financial spread betting could be the answer. You bet on the price movement and it doesn’t matter what currency the stock is in.
This means that as a trader you don’t have to be concerned about the change in value of the currency. It would be a shame if you couldn’t take advantage of a great company because the you were worried about the currency.
Financial spred betting has many advantages but is also risky. Why not try paper trading until you feel comfortable?
Nigel Howell has been investing and financial spread betting for many years. If you want to know more about financial spread betting then go to his site and learn from all the trading resources.
