All About Spread Betting

Spread Betting is similar to trading with CFDs. It gives investors the chance to trade in large amounts of stocks as well as the open stock markets. Although billed as “betting” there’s actually no bookie or dealer which take an upfront wager and keep it if you lose, you are simply betting in opposition to someone else.

This is how Spread Betting operates, study the index closely to identify which stock you intend to place a spread on – this could be going up or down in value. Once you have decided you then need to place your bet with a spread betting dealer, who is simply a broker or intermediary. Your trade will then be matched (more often than not using an automated computer trading system) to an individual with the opposite view to you within the marketplace – this can continue all day for both buy and sell.

Firstly, all traders must fully understand the NTR (Notional Trading Requirements) which is the bare minimum deposit the spread betting broker requests to open a new position. In margined trading this is known as the margin. Every single margin is reliant on the volatility of the specific market or industry.

As an investment, Financial Spread Betting is short term so you shouldn’t consider as long term. The risk loss is just as high however you can make large amounts of money. Make sure you place a stop-loss limit to ensure you don’t wake up in the morning and find all your money has disappeared due to the share price moving extensively whilst you were sleeping!

Don’t let the word bet in this form of trading put you off because you think it seems even more unethical or risky as it’s gambling. It isn’t so think of it another way, it is the same as buying shares – which you buy with a gamble they are going to go up in price. Instead you would place a spread bet on the share for the same reason as you think it will increase in price. The difference is you will need a lot less money to place a spread bet on the movement of the share, rather than purchasing a number of actual shares.

Remember – it’s always best to fully understand how Spread Bets and any other form of trading works before investing large amounts. Spread betting has been around for well over 25 years so make sure that you do your research first as there is plenty of information out there. Also ensure you take any necessary precautions to protect your investments. Spread betting can take a while to get to grips with so don’t be totally disheartened if you lose at your first attempts.

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