Financial spread betting enables people to bet on the outcome or performance of various financial markets, companies and entities without limiting potential profits. The extensive range of markets means that traders can bet on company share prices, indices such as the FTSE, Dow or Dax as well as commodities such as gold, silver and oil. The constant access to global markets means that traders can bet on the market of their choice and accurately monitor market performance in order to increase their chances of making a profit.
Traditional forms of financial trading involve buying or selling a share or commodity and hoping the market performs well. For example, if you bought shares in a large company, you would be reliant on that company making a profit in order for the share price to rise. In order to make a significant profit, people were often forced to by large amounts of shares and hope the company performed well. Every time individuals buy or sell shares they generally have to pay fees or a commission to a stockbroker or dealer thus increasing the original cost of their investment. In order to genuinely make a profit, the increase in share price or market value must be enough to cover the initial outlay including any fees.
As spread betting does not involve the actual purchase of shares or commodities, it cuts out these costs meaning that any profits made go directly to the trader rather than on trading fees. In addition to this, financial spreadbetting does not rely on market prices increasing. Traders are free to bet that market values will drop and can, therefore, profit from falling markets as well as increasing market prices. Providing they have predicted the outcome correctly, traders can profit from the markets regardless of actual market performance.
Although financial spread betting is considered a form of gambling, it is governed by the FSA and is subject to various regulations and guidelines. This, in conjunction with the fact that traders are not generally required to pay tax on profits, means it is an attractive form of trading for many investors. With many traditional forms of investment failing to make a profit due to the turbulent economy, being able to profit from falling markets is attractive to many investors seeking alternative options.
Due to the extensive range of markets available, many financial spread betting companies provide market analysis tools to allow traders to identify trends in the markets and bet accordingly. There are a number of educational tools available in addition to copious amounts of useful information regarding the intricacies of spread betting.
By taking advantage of the tools available to monitor the markets and regularly checking the performance of their bets, traders can limit potential losses and increase their profitability. Rather than using traditional methods to trade on the financial markets, investors can use financial spread betting to profit from the markets without incurring costs and without being reliant on thriving markets. The advantages of financial spread betting mean that many traders are now turning to spreadbetting to negate the adverse effects of the economy and generate profits from the financial markets once again.