Have You Tried Financial Spread Betting yet?

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By [http://ezinearticles.com/?expert=Abi_Ola]Abi Ola
What is spread betting?
Simply put, financial spread betting is a tax free alternative to conventional trading!
Spread betting is a very easy concept to understand. Indeed, if you already trade anything at all then you should have no trouble understanding the idea of spread betting.
Don’t get confused. For those of you out there who already trade derivatives, well, spread betting is just another derivative product. You don’t actually buy the underlying stocks, you just speculate (bet) on where you think the prices will be at a point in the future. When you look at spread betting in this way, it becomes obvious that is basically the same as your regular trading in any other derivative instrument. When you close your position, your spread betting profit or loss is calculated as the difference between the opening price and closing price of the bet, multiplied your stake.
What are the attractive features of spread betting?
• Spread betting is a derivative
As I explained above, spread betting is just another derivative instrument. Like the typical derivative, spread betting gives you exposure to the movements of the underlying stocks, bonds, currency or commodity, without the need to actually own the financial security being traded.
• Spread betting is a margin instrument
Typically, when you place a spread bet, you are only required to deposit about 10 percent of the total value of the trade.
This means that you get a bigger bang for your buck. Of course, you should be mindful that you can also lose more than your initial deposit if margin acts against you when a trade goes wrong. Whatever you do, always trade with discipline and never forget to use a stop loss.
• Spread betting is capital gains TAX FREE!
Your ability to benefit from this particular feature of spreadbetting depends on the current legislation in your country. For those in the UK for instance, spread betting is classified as a ‘bet’ and as such, is free from capital gains tax. So, you keep every profit you make.
For this last feature alone, I think spread betting is simply AWESOME!
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Copyright 2007, [http://www.spread-betting-skills.com]spread-betting-skills.com
The author is the editor of spread-betting-skills.com a UK-based specialist investor education website focusing on financial spread betting. The site is dedicated to discussing spread betting strategies and risk-controlled trading systems focusing on helping traders hone their spread betting skills. Also includes news, views, reviews articles and information relating to financial spread betting.
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