subject: What Is Financial Spread Betting? [print this page] What has happened to value of your investments recently? When I say recently I mean over the last number of years. The majority of people would've seen big declines. The experts tell you to hold out because eventually it will come good. People heard that ten years ago so now want to take control for themselves. They are doing that through financial spread betting.
Have you ever heard of the 'buy and hold' strategy? Most people have but even if they haven't it is probably a strategy that they use. You buy an asset and wait for the price to go up. But what happens if you think the price will decline? This is where financial spread betting can be useful. If you think that the price will decline then you have the chance to short it.
You don't own the asset with financial spread betting so this is why you can trade short. You open a trade by either placing a long or short stake on the price movement. These stakes are often based upon a 'point' movement. So if you place a 5 per point long stake on gold you will make 5 for every point it goes up.
I know I have probably lost half of you with that last paragraph but please bear with me. Yes it is complicated... well it will seem that way in the beginning but you will get there. Why not practice with a demo account offered by the financial spread betting companies?
If you are paying lot of tax then financial spread betting will appeal to you if you live in the UK. If you do then you won't pay taxes on your profits. This, as you can imagine, attracts a lot of people who would otherwise have to pay a lot of tax on other investments.
I hope that I have demonstrated some of the advantages of financial spread betting. There are others benefits as well as some negatives that you should understand before you start.
by: Nigel Howell
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