Financial Spread Betting Faqs

Introduction

In today’s world, there are a myriad of ways of playing out money to work in your favor. One of these tools is the financial spread betting.

About financial spread betting

Financial spread betting, sometimes known as spread trading, is a way in which a trader can enter a trade market without necessarily buying the underlying shares. It is becoming increasingly popular. It provides you with an array of options in that can enable you to trade such as contracts for difference, futures and options. You can also buy shares, if you wish, and participate in traditional share trading. Financial spread betting allows an investor to hypothesize or discern the directional movement of the price of an instrument of finance. This requires you to either physically own the instrument or to physically settle with it. However, the speculation can be done on the price movements of an instrument without having the actual ownership of any shares or derivatives. Therefore, financial spread betting allows a trader to bet based on a belief of whether the price quoted for a certain financial instrument will strengthen or weaken. In short, financial spread betting is an instrument that allows you to officially bet on whether an instrument will go up (strengthen) or go down (weaken). One could make a speculation on an index, a share, a commodity or a currency, without actually owning any shares or derivatives.

Benefits

As mentioned above, financial spread betting is all about speculation about the directional movement of the price of a financial instrument. In order for you to embark in trade, you get to decide on the amount you wish to trade on each point movement of the instrument. When the point movement moves in your favor, you get a profit. On the contrary, each point movement of the price of the underlying instrument that moves against you will result in a loss for you.

When it comes to ownership, you do not own the underlying asset when you trade. You are instead entitled to some of the benefits such as rights issues and dividends and so on, which gives the illusion of you being the owner of the underlying asset. The main difference here, however, is that the trader does not receive any voting rights on individual equities.

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