Financial spread betting is one of the fastest growing ways of speculating on the movement of an underlying index or share and has become a genuine alternative for many to trading in actual shares. There are many advantages to spread betting over trading in ordinary shares. For example Cheap Tuukka Rask Jersey , no stamp duty is payable (compared to 0.5% on traditional share purchases), and any profits made are not subject to capital gains tax. You also do not pay any fees or direct commission to the spread betting company, ensuring you end up with more money should you win. However, it is important to bear in mind that, if betting on volatile markets Cheap Patrice Bergeron Jersey , you could incur large losses, and so a stop loss should be put in place to prevent this. So how does it work?
Spread betting can be done on a variety of underlying instruments, including stock market indices such as the FTSE or NASDAQ, individual shares, currencies Wholesale Boston Bruins Jerseys , interest rates and commodities such as oil. The movement of the prices is measured in points and you place a bet of any value for every point movement – a buy bet if you believe value will increase or a sell bet if you think it will decrease.
For example…
Royal Bank of Scotland is currently trading at 19-19.5
Investor 1 thinks that shares for RBS will rise and place a buy bet at 19.5 for £10 per point.
Investor 2 thinks that shares will fall and therefore places a sell bet at 19 for £10 per point.
Potential outcome
RBS rises to 25-25.5
Investor 1’s prediction was correct and nets them £55 (5.5 points X £10).
Investor 2 failed in their prediction and therefore loses £60 (6 points X £10).
Of course, this is an incredibly simplified example of what would actually happen, but it does give an idea of how the process works. For more information, you should visit a specialist spread betting company who can provide you with more in-depth details.
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