Financial Spread Betting Accounts
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In financial spread betting, bettors bet on the price movement of a chosen financial instrument. Financial spread betting offers many advantages over traditional share trading.
It is essential you understand the risks involved. Financial Spread betting can be an effective investment tool if you understand the nature of the selected financial instruments. Financial spread betting also offers tax benefits*.
To get going you need to open a financial spread betting account in order to trade. You need to fill in an application and then spread betting companies carry out credit and/or suitability checks before opening an account for you.
Most spread betting companies offer two types of account. A Deposit Account where you deposit enough money to cover your probable trading requirement and a Credit Account where you have a credit limit for your trading. Once that is done, you can start your financial spread trading. Most companies let you trade over the Internet.
Naturally the product range on offer varies between companies, while some focus on shares, others focus on the most liquid and heavily traded forex markets.
Demo Accounts
To help investors familiarise themselves with the basics of trading, some of the leading financial spread betting companies offer a virtual trading account.
Here you can trade with virtual money in an account that contains nearly all of the features and functions of a real financial spread trading platform.
For these test accounts there are sometimes 15 minutes delays in the prices compared with real money accounts where the pricing is real-time. Some sites also have a range of information pages that give you details about a company's financial position and the past performance of its shares.
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Let us take an example of Mr. X!
Mr. X approaches a financial spread betting company to open financial spread betting account. Once he has opened an account he decides to speculate on ABC Company. The spread betting company quotes a spread for a daily trade between 131p and 133p. ie spread betting firm thinks the share price for ABC Company will finish around 132p.
Mr X buys at £25 per penny to go long of 133p using the daily spread bet quote. That is to say, he thinks the share price will finish above 133p.
He follows the stock movement throughout the day.
To avoid too much of a loss Mr. X has uses a stop loss feature whereby he instructs the company to automatically close the bet at 126p. As it happens, Company ABC's share price closes higher at 135p. Hence Mr. X has made a profit. Profit = (135p - 133p) x £25 per penny stake = 2p x £25 per penny = £50 profit
However, had the market moved against Mr. X and finished at 130p then he would have lost. Loss = (133p - 130p) x £25 per penny stake = 3p x £25 per penny = £75 loss.
Some of the leaders in the financial spread betting markets include Financial Spreads, Capital Spreads and IG Index.
When you open a financial spread betting account with these leading companies you can take advantage of delving into numerous types of financial spread betting markets and also make the most of the free information available to clients on the respective websites.
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Financial Spread Betting Accounts' by KK, updated 05-Dec-08
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Financial Spread Betting Accounts, updated 05-Dec-08
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Financial spread betting account profits are tax free*. Profits from financial spread betting are not subject to income tax, capital gains tax or stamp duty. What's yours is yours. There is no commission when you trade online using your spread betting account. Unlike many online share dealing services there is no...read article: Financial Spread Betting Account Information.
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A) Get free spread betting tips, offers, price updates, important news and more!
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