What is Spread Betting?
Do you really know what is Spread Betting? Financial Spread Betting is basically placing wagers on virtual or stocks which are related to the real live stocks.
The difference with stock trading to spread betting is the ownership factor, whereas in Financial Spread Betting unlike stock trading the player never really owns the stock but rather just bet on it.
The best thing about what is Spread Betting is the fact that one can bet on just about anything such as stock, currencies, oil price, gold price and so on. The Spread Betting much like on sports betting is either under or over bet in which the value or the units can either go up or down.
Shares can be expected to rise in value so they can be sold in profit which is called “going long”.
Shares can also be expected to fall in value so selling them will be minimizing the loss, this is called “going short”.
The Spread by definition is basically the difference between the buying price and the selling price as quoted by the Spread Betting Company.
The main advantage of spread betting is the fact that they are tax free and run within time limit which means that the players can choose whether to close the bet early if this proves financial for him. The player can also close the bet to minimize losses if the bet gone against him.
Another advantage is the “stop loss” option which enables the players to stop the bet when the bet has gone against him, meaning he will lose up to a certain amount the player limit himself to and not more than that.
Unlike trading real shares, in Spread Betting the player only provides a deposit which is a margin bet or a proof of funds and not the entire amount of the share,
Unlike regular sports betting, the bet can end before the end date if the player chooses to do so, either from positive or negative reasons. This means that when betting on spreads you don’t have to wait to the due date of the bet.
An example to what is spread betting can be a bet on the shares of a company. Let’s say the Spread Betting Company quoted a spread of 530. The sell price is 520 and the buy price is 520 (520-530). If the player chooses to bet £50 per point for the share price to go up and indeed the share price goes up by 555 when the player decides to close the bet, the player would make – 25 points in profit times £50 = £1250 !!
It can go the other way around as well of course so one should be careful when placing a bet on financial spreads.