Financial Spread Betting and Forex
A spread can be termed as the difference the asking price (buying price) and the bid price (selling price). Financial spread betting is an investment option/vehicle that enables investors to invest in shares and stocks while at the same time making speculations on the probable changes in the financial markets. It’s a binary bet where the investor hopes to gain in the future for the present investment.
The foreign exchange (forex) market is a highly volatile market which means that investors need a hedge to shield them from making losses whenever the market is not favorable. Spread betting is a way of gaining maximum benefit from a forex market considering that it’s a very liquid market (turnover in the US has hit the trillion mark). The leverage is important because unlike the other markets like stock trading, the forex market is not subject to the bearish and bullish markets. Thus there may be a tendency of the brokers taking advantage of this to exploit clients. The spreads can be fixed or variable. The fixed spreads are safer as they cannot be manipulated by brokers. In order to gain from trading in forex market, the spreads should be as low as possible. Thus there is need to compare the spreads offered by different forex brokers.
Financial spread betting offers many benefits to the investors. Like most terminal incomes from trading in securities, the capital gains from spread betting are not liable to taxation. So if an investor sells shares at a price higher than he bought them, this amount will not be charged at all. However, capital losses cannot be offset against one’s tax liability. Being a derivative, no stamp duty is chargeable.
The financial spread betting offers investors with a wider range of markets where they can invest. The underlying asset can range from stocks, bonds as well as import and export products. The investor can also indulge in the forwards and futures market.
It also allows the investors to go long or short such that they can sell or buy the underlying asset in line with the market forces; i.e. sell when prices are high and buy when the prices are low. Thus if the underlying asset is stock, the price changes in the stock market will determine whether the investor goes long or short.
Operating a financial spread betting account requires lower levels of capital as the product is usually leveraged. Thus investors are able to trade shares of whichever the underlying asset is at margined prices because the spread betting is offered at a percentage margin thus the investor will only pay the margined price for the shares. For instance, if shares were trading at $50 and the margin rate is quoted at 10% then the investor will buy the shares at a reduced price of $5.
Financial spread betting enables the investor to predict on the movement of shares or stocks without the need of a broker thus eliminating the need to pay fees or commissions.
About the Author
Find out more about spread spread betting and financial and financial spread betting.
Previous Article - Next Article
Add Your Picture
Article Submitted By:
Serge271
Subscribe To: Serge271 Rss Feed
This Article Has Been Read 204 Times
Publish/Share this article
Remember: The article body, title, author bio and links may not be changed or removed. By publishing this article, you agree to all the terms in our Terms of Service.
Rating: Not yet rated
More articles in this Category
Beat The Market With Day Trading
How to select your stock broker
Can a forex diary complement the trading system?
Futures Trading: What To Do
A Basic Introduction to Trading
The Keltner Channel and Bollinger Bands
Traits Of Successful Forex Traders
Know About Option Pricing Formulas
ES Emini Day Trading: The Perfect Day Job
Introduction to Using ETF Trading Strategies to Increase Your ROI
CFDs Futures Trading
Why Setting Trading And Investing Goals Can Improve Performance
Have You Learnt The Unknown Facts About Trading For A Living
Trade Futures with CFDs
Why Trade Futures and Options
Some Helpful Tips on Day Trading For a Living
How Option Trading Profit In Any Market Conditions
The Biggest Threat to Your Own Investment Success Could be Yourself
Secrets Of Technical Analysis In The Stock Market Trading
Is A Forex Trading Course Really Necessary?
Novice to Pro : Journey on the Forex Learning Curve
Trade Commodities with Financial Spread Betting Broker
Financial Spread Betting and Forex
Advantages of CFD Trading
Getting Started with a Forex Trading System Course
Exit Strategies In Trading Systems
Swing trading is the best trading option!
Trading Online Based On The Relative Strength Index
Forex Day Trading With The Forex Trading Machine
