If you like speculating on the movements of the different global financial instruments, spread betting is the act to partake. When you decide to spread bet, you take a decision on your expectation of whether the financial instruments price will fall or rise. If you expect the price to fall, you open a long position called a buy. If you expect the price to rise, you take a short position called a sell. A spread is the variation between a buy price and the consequent sell price. Spread betting allows you to trade on an index and also a share. This diversified nature has made it be legally recognized and regulated by the Financial Conduct Authority.
Spread betting generates money easily due to the following factors:
Spread betting Online
Bets are placed through an online platform that is created for that purpose alone. For example CMC markets spread betting platform where you can place buy or sell a pre stated amount for the financial instrument you are trading on. The amount can even be as little as 5 Euros. This process is known as spread bet ‘stake’ size. The bet can get you a long or a short. Either way, you easily make money from your spare time.
Huge returns on low investments
With spread betting, it is not a surprise to see massive returns from a little investment hence making money on your spare time. This is because of the high leverage that it has. It is not a must for you to pay the full cost on the upfront. Low margins allow for good leverage positions. Spread betting firms mostly require 7.5% to 10% deposit on the spread bet. In addition, spread bets do not require high initial capital. This fact champions the money making idea as no deduction of capital expenses from your returns.
Trading on Off the Market hours
Almost all spread betting companies are usually open all the 24 hours in a day from Sunday morning up to Saturday night. This is contrary to traditional money markets that gave less money making time. Spread betting is the advanced form of this traditional share dealing that had time restrictions. You can make money at any time you want to and at the same time, make it at your free time.
Fast Deals
Spread betting companies are not brokers. There are no delays therefore making the spread bets placement to be a one minute matter. Additionally, you will always get a chance to trade since you are dealing with the company itself and not the always unending intermediaries for example online brokers. This helps you in that you make your money online within a short time, with a lot of ease and above all at your spare time.
Ability to make money when markets rise or even fall (Short or Long) For the last two years, the stock markets have been recorded to be so bearish. It has become extremely hard to make money while only dealing with the current popular bear market. However, the shorting allows you to make money both in the bear and bull market. This means that you can make money both in a rising and falling markets. The fact that spread betting trades only with price movements, rising prices or falling prices do not matter because in both, you are guaranteed of making money from the comfort of your spare time.
Payment of Dividends
Dividends are paid and credited to your spreading bet account immediately they come into effect making you to earn money instantly at home. For bets held in the future, they are accurately deducted from your spread. For example if you have 12 percent dividend payout in the future, your spread will be quoted 12 percent less than its original amount. This happens only in the rare circumstance where the payment of the dividend would be impossible at that certain time.
Money Market Hedging
Spread betting gives you an option to diversify your bets by allowing you to short at your preferred global financial instrument. It shows other effective ways of hedging share portfolios in addition to its major role of price speculations. This intern allows you to diversify your options for a constant flow of money earned at your spare time.
Conclusion
There are high chances of tax savings on Spread betting. You will get a capital gain that is tax free if you are in a position of having a dividend payment share built from the bid-offer spread. In addition, spread betting is commission free and is most suitable to a person who prefers buying and selling as many time as possible at a certain time for example in one day.