Financial spreading is an area of interest to a lot of people, who are keen to increase their income by speculating on financial markets. However, many people lack the confidence that comes with understanding, to immerse themselves into this type of trading.
Here we will take a look at 5 points that you should be aware of, in relation to financial spread betting. Hopefully, this will give you a greater knowledge of this practice, and maybe you will even invest to try and turn a profit. But before you do, read on.
1) You can trade tax-free
If you gain profits from spread betting in the UK, the good news is that they are exempt from tax. This means you don’t have to pay capital gains tax, income tax or stamp duty on your profits. This appeals to a lot of people who are interested in speculating on the markets.
2) You can trade long or short
Trading long means that you are speculating that a price will increase. Trading short, accordingly, means that you are betting that a price will decrease. Financial spread betting is flexible as it allows you to trade either way, depending on your hunch and the research you have done.
3) You trade on margin
Financial spread betting is leveraged, meaning that you only have to put down a small percentage of the overall value of your trade. This frees up extra capital to be used or invested elsewhere. The percentage amount mentioned here is known as the margin, and this can range from as little as 0.2% of the total value of your trade.
4) There are risks involved
As with most types of investment, there are risks involved here. It is called spread betting after all. It is possible to make a nice profit with financial spread betting but it is also possible to lose everything you deposit, plus more.
5) It helps to find a trusted and regulated financial spread betting company
As witnessed in the aforementioned example link (chosen at random because of its reputation within retail FX and spreads spheres) – There are various financial spread betting companies out there, offering platforms on which you can trade. These firms can help you whether you are an expert in financial markets, or a total novice, unversed in the ways of investment. The main point is that it is never too late to learn about financial spread betting, and indeed to do it if it appeals to you after you are aware of how it works and what the risks are.