What is Financial Spread Betting?

Financial Spread betting is one of the most exciting and fastest growing ways of speculating on the movement of an underlying share or index and for many investors it has become a flexible and cost efficient alternative to trading ordinary shares.

Advantages of Spread Betting

* No Stamp duty is payable (saving 0.5% compared to a traditional share purchase.

* Tax Free Profits: Profits on spread betting are not subject to capital gains tax.

* No direct commissions or fees are paid to the spread betting company.

* You can profit from falling or rising markets.

* They are traded on margin therefore bets can be placed with a relatively small initial outlay.

* A single account can give you Access to far greater range of financial markets.

* You can limit your risk using a “Stop Loss”.

* The ability to place very small bets, some companies let you place a trade of as low as 1p per point.

* Tax Laws are subject to change.

Drawbacks of spread betting

Financial spread betting is less suited to the long term investor,if you hold a bet open over a long period of time the costs associated increase and it may be more beneficial to have bought the underlying asset. You have no rights as an investor, including no voting rights and you will not benefit from dividends.

From Rob Lee of AiMS Trading Club and Forex training courses

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