What is a financial spread bet?

Put simply, a financial spread bet allows you to speculate on rises and falls in the financial markets.  You can profit, or incur losses, for each point change matching the direction you predict the markets will move in.

Financial spread betting offers a number of benefits that traditional trading can’t provide, like not having to own the underlying asset which you’re trading (e.g. a share in Apple). You can place financial spread bets on thousands of global shares, indices, bonds and securities without ever having to deal directly with the markets.

What is spread?

As a trader on any derivatives market you are offered two prices either side of the underlying market price: the buy price and the sell price. The difference between these two prices is known as the spread.

For example, the underlying market price for the UK100 index is at 6500 points. Currently the bid price for this market is 6499.6 and the offer price is 6500.4. The difference between the bid and offer (6500.4 – 6499.6 = 0.8) is known as the spread.

The size of a spread is important because it is essentially the amount you are charged for every trade you make, there is no commission charged in spread betting. The tighter a spread is reflects how quickly you can start to realise profits, or losses, from the market you are trading.

How does a financial spread bet work?

A financial spread bet comes down to you predicting whether the market you are trading will rise or fall. If you are going long in the belief a market will rise, your bet will open at the offer price. Your profits will increase with each point rise above the level you entered the trade.

If you believe the markets will fall and choose to go short, your bet will open at the bid price.  Assuming the markets behave as you predicted, your profits will increase with each point the market falls below the price you entered the trade.

Using the UK100 example above, you speculate the UK100 will rise and go long (open a buy position) with a stake of £10 at 6500.4. As you predicted, UK100 rises 10 points to a bid/offer of 6509.6-6510.4. At this point you decide to close your position and sell at the bid price of 9509.6. Because you bought at 6500.4, you have increased your position by 9.2 points.  9.2 points multiplied by your stake of £10 gives you a tax-free profit of £92.

You will incur losses in line with each point change in the event that the markets move in the opposite direction to your position.

What are the benefits of financial spread betting?

Tax-free: Any profits you make from spread betting are exempt from UK Capital Gains Tax and UK Stamp Duty. This may be dependent on personal circumstances and tax laws may change.

Leveraged: One of the key benefits of a financial spread bet over traditional trading is that it is a leveraged product. This means that you only have to deposit a percentage, or margin, of the total notional value of your bet. This margin requirement is typically between 0.5% and 4% of the potential value of your trade.  Leverage can also work against you if the trade does not work out as expected so you need to understand this risk carefully.


Go long or go short: By taking a sell position, you can profit from a fall in the value of a market. Unlike traditional trading, you can always stand to profit no matter which way the markets are moving.


Risk Warning: Spread bets and CFDs are leveraged products. Losses may exceed deposits.


It’s Time To Stop Struggling Financially With The Help Of This Advice

It's Time To Stop Struggling Financially With The Help Of This Advice

It’s Time To Stop Struggling Financially With The Help Of This Advice

Learning to track one’s personal finances is an important process, no matter how much money is involved. If you think you do not make enough money to consider organizing your finances better, think again! Good personal finance skills are perhaps most important when your budgets are tight and you need to get the most out of every penny.

Don’t get talked into quick money making schemes. It can be very tempting to give up your savings account to someone who promises to double or triple your money in a short period of time. Take the safe route, and realize that nothing is free. You will be better off slowly and steadily growing your savings rather than risky moves to get more faster. You could end up losing it all.

Try to pay more than the minimum payments on your credit cards. When you only pay the minimum amount off your credit card each month it can end up taking years or even decades to clear the balance. Items that you bought using the credit card can also end up costing you over twice the purchase price. Continue reading

How To Solve Your Financial Problems With These Simple Ideas

How To Solve Your Financial Problems With These Simple Ideas

How To Solve Your Financial Problems With These Simple Ideas

You can have a hard time in life if you do not have a good financial situation. Here are a few tips to improve your finances.

If you have lost a prior home to foreclosure, this does not mean that you are out of home owning altogether. You should be able to get a government-backed mortgage through Fannie Mae, Freddie Mac and the FHA, in as little as three years after your previous home has foreclosed.

You should never risk more money on a trade than you can safely afford to lose. This means that if you lose any money it should not have the potential to destroy you financially. You have to make sure to protect any equity that you might have. Continue reading

Trouble With Your Finances? Get Control With This Advice!

Trouble With Your Finances? Get Control With This Advice!

Trouble With Your Finances? Get Control With This Advice!

If you have trouble with personal finance and budget balance, you’re not alone! Many people find themselves in financial trouble and debt because they just don’t understand how to manage their money! If this is you, read on for some simple ideas on managing your money and keeping yourself out of debt!

When trading your pairs, do yourself a favor and only trade one or two currency pairs. The more you have, the harder it is to keep up with all the times that you should trade them. By focusing on just a couple, you can effectively become aware of their trends and when to make a trade to make a profit.

If this is the wrong time for you, you should not sell. If you own stocks that are earning fair sums of money, leave them be. Carefully study your portfolio, and decide which stocks you should sell and which ones you should hold on to.

To maximize your credit score, have at least two, but no more than four, credit cards. Having too many credit cards makes it seem that you are not in control of your finances, whereas, too few will not allow for a speedy credit build up. Begin with just two cards to raise your credit; you can always add more when it becomes necessary. Continue reading

Information You Ought To Know About Personal Finance

Information You Ought To Know About Personal Finance

Information You Ought To Know About Personal Finance

Personal finances today aren’t so much what you spend your money on, but how MUCH you spend of your money on certain things. Everyone can benefit from cutting back. Take a look at the ideas to follow and see if there are ways that you, too, can put a little more in your pocket each month.

Scheduling a long car journey for the right time of year can save the traveler a lot of time and money. In general, the height of summer is the busiest time on the roads. If the distance driver can make his or her trip during other seasons, he or she will encounter less traffic and lower gas prices.

Don’t be exclusive! Many companies throw a curve-ball into their contract- a piece saying you can only work with them. If you want to make the most money for yourself, steer clear of those companies that require you to sign these. It’s best to work for a company willing to share the field, not only are they more confident in their products, but they also are more likely to have your best interests in mind. Continue reading