Spread Betting Vs Traditional Trading By The Spread Bettor
LONDON, April 13, 2012 /PRNewswire/ --
Those new to spread betting often ask me why I choose to spread bet over more traditional forms of trading. The answer is always simple.
Spread betting with City Index allows me to trade on the future price movements of over 12,000 financial markets, including indices, shares, currencies, commodities and more - a level of access I would not be offered through more traditional forms of trading.
Whilst the above is a significant attraction to me and my fellow spread bettors, it doesn't stop there.Let us look first at the key features of spread betting. Tax-Free Profits* Profits made through a City Index spread betting account are free from both Stamp Duty and Capital Gains Tax, at present in the UK. As a result, I am automatically saved a large percentage of my profits; a percentage that through traditional forms of trading, I'd be required to pay. However, remember that tax laws are subject to change and depend on individual circumstances - seek independent advice if necessary. Margin Spread betting's low margin feature requires me to initially deposit typically between 1% and 10% of the total value of my position, depending on the market I choose to trade. When compared to traditional trading, the potential for profits and losses as a return of initial capital outlay is significantly higher. However, it is important to remember that losses can exceed the initial outlay. Profit from A Falling Market Compared to traditional trading, spread betting enables me to gain exposure to price movements in a market that is both rising and falling. For example, having completed extensive analysis of my chosen market, I will decide whether I believe it will rise or fall. If I believe it will rise, I choose to go long and buy. My profits will then rise in line with any increase in that price, on the basis I was correct and the market's price does in fact rise.
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