Why open a spread betting account?

Spread betting is a financial derivative that enables you to trade on the price movements of a wide range of markets. Unlike traditional investing, you don’t take ownership of any assets when spread betting – which means you can go short as well as long, take advantage of leverage and more.

Spread betting is a tax* efficient way of trading the financial markets without having to physically own the underlying instrument. They are cash settled products that allow you to speculate on the price movements of a financial instrument. Another key difference to conventional share trading, spread bets are a derivative product traded using leverage, so they are not as capital intensive as physical share trading – you only need to deposit a percentage of the full value of your position. The effect or impact of leverage can amplify losses as well as profits, so it’s important to understand the risks before deciding to trade.

*Tax treatment depends on individual circumstances and is subject to change. Tax laws may vary outside the UK​. Your profits and losses are amplified as they are based on the full value of your trade.

How does a spread bet work?

Choose a financial instrument you wish to trade and select whether to ‘buy’ or ‘sell’ the instrument. If you think the value of the instrument will increase – buy (or ‘go long’). But if you think the price will fall – sell (or ‘go short’). To close your spread bet you simply place an offsetting trade.  If you have a long spread betting position you would need to place a sell order to close or partially close that position. The more the spread bet price moves in your direction the greater the profit you will generate. Adversely, the more the spread bet price moves against your direction, the greater the loss will be.

Is financial spread betting suitable for everyone to trade?

Spread betting involves a high level of risk due to the impact of leverage, so they are not ideally suited to everyone. If you’re new to financial spread betting, ensure you have appropriate knowledge or understanding of leverage products and only trade with funds you can afford to lose.
Research the instruments you wish to trade and become accustomed to a trading platform via a demo environment before starting live trading. For more experienced traders, spread bets can be utilised for hedging purposes of investments such as equities, and are a capital efficient way to trade actively.

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