Spread betting remains one of the most lucrative and robust markets in the United Kingdom. Traders get to enjoy a diversified portfolio of assets with some 5,000+ markets at world-class trading platforms like ETX Capital for forex trading. Currency trading markets allow for instant execution of trades, low spreads on a myriad of financial asset categories (commodities, equities, Forex, bonds and indices), and a wide selection of charting tools.
Tight spreads are imperative for maximizing profits on individual trades. They also determine the difference between losses and profits. To be profitable with spread betting activity, it’s important to understand spreads and markets, the educational resources available to you, and the quality of the trading platform you’ll be using. Remember that there are no capital gains taxes imposed on spread betting, and there is no stamp duty on spread betting activity either.
A Lesson in Trading: Spread Betting in Action
Reputable trading brokerages are difficult to distinguish between. Fortunately, several leading brokers have separated themselves from the competition by providing value-added benefits in the form of a Sentiment Tracker. The ETX Capital sentiment tracker uses live data feeds to monitor trading activity on the Internet.
By evaluating the quantity and quality of media mentions, it is possible to generate an accurate statistical representation of leading bourses like the FTSE 100 index, the DAX 30, the CAC 40, the EuroStoxx50 PR, Dow Jones, NASDAQ Composite Index, and the S&P 500 index. By monitoring aggregate market activity, it is possible to gain better insights into market dynamics.
The quality of the trading platform is paramount when it comes to Forex trading. Fortunately, the gold standard – MT4 – is used by the world’s most reputable brokers. Several proprietary trading platforms offer powerful charting abilities, rapid execution of trades and a wealth of tradable assets.
These comprise a wide range of categories such as commodities, Forex, stocks, and indices. Derivatives-based trading a.k.a. spread betting uses leverage to trade the financial markets for maximum gain. Unlike traditional stocks trading, no ownership of the underlying asset is necessary.
As always, it’s important to follow all necessary procedures to minimize losses and maximize gains. This can be done by using leverage and margin to your benefit. Other important spread betting strategies include the placement of limit orders, and margin calls. The bigger the number of spread betting markets, the better the variety available to traders.
Reputable brokers offer thousands of markets across the board. The similarities between contracts for difference and spread betting are abundant. However, it should be remembered that spread betting has the distinct advantage of being tax-free.
Speculating on Forex Trading
Forex trading is similar to spread betting on Forex. In both cases, you are speculating on the value of one currency relative to another. Estimates peg the total daily turnover of the Forex market at some $5.1 trillion, and this over-the-counter market does not require a central exchange or a clearinghouse. Currently, 20% of the Forex market is comprised of purchases of foreign currencies for multinational corporations.
The remaining 80% of Forex trading is undertaken by speculators. Of course, there are several ways to trade Forex, notably contracts for difference (CFDs) or spread betting. The benefits of spread betting over CFDs is no capital gains tax, no commission, and no stamp duty. In both cases they are leveraged products, and you can trade currencies whether they are rising or falling.
All spread bets have expiry dates, but CFDs do not. The UK fully regulates spread betting activity, and this falls under the jurisdiction of the Financial Conduct Authority (FCA). Many Britons are turning to spread betting on currencies as a viable way to earn a second income stream, particularly with a bearish GBP on the horizon.