The 5 Simple Reasons I Use Spread Betting To Trade The Markets
People often look back at me blankly when I tell them I use Spread Betting to trade the financial markets
In this article I am going to give you an introduction into what this Spread Betting is all about but more importantly I want to give the top 5 reasons I use and profit form it.
So What Is Spread Betting?
Open a Spread Betting account and you instantly have the ability to trade a huge amount of different markets all from one place. Any financial Spread Betting firm will allow you to take positions in markets including shares, commodities, forex, indices and more.
Spread Betting is simply “a tax free alternative to profit from moves in a range of financial markets”
Why Have I Been Using Spread Betting So Long?
My Top Reasons To Spread Bet
- Small Initial Deposit
When I first began trading stocks, like most beginners, I didn’t know what I was doing. That’s fine. What helped me gain a lot of experience quickly was the ability to trade whatever I wanted without risking much money. I opened a Spread Betting account with a few hundred pounds and got trading. When trading UK shares my losing trades could be no more than about a tenner!
Most Spread Betting firms allow beginners to open ‘demo’ or ‘virtual accounts’. These are accounts that mimic real accounts but only with virtual money. The idea is great because you can get used to how to place orders and get the feel of the markets. However, in my experience, a super winning trader in a virtual account can be the complete opposite when real money is at risk! This is why I like the ability to trade real money but at minimal costs with a Spread Betting account.
Sure, beginners can open ‘demo’ or ‘virtual accounts’ but from my experience, there’s no substitute for having real money at stake.
Fast forward tons of trades later and I still can benefit from the ability to trade small today. I’m always looking for ways to improve my trading and therefor always developing new trading strategies. Being able to trade small amounts allows me to test these strategies without risking much cash.
- Buy or Sell/Long or Short
Buying into a market or what’s also called going long means that you will profit as the price rises. Going short of a market means that you will profit as prices fall.
I am a totally unbiased trader. Many traders have a psychological problem with going short or betting on prices going down. I don’t. I just go with where I believe the market is going. So if a company Is doing really badly and their share price falling, I will have no hesitation going short or shorting that company to profit from it.
Spread Betting makes shorting a market just as easy as buying a market. In the majority or markets, opening a short trade is just a case of clicking the sell button rather than the buy button.
I believe trading without the ability to go short would be a handicap for me.
- No Capital Gains Tax or Stamp Duty
I need not go into any more details on this one, I think the benefits are self explanatory.
It’s worth mentioning that although profits aren’t taxed, there is also no tax relief for losses compared to other ways to trade the markets like traditional buying of shares. People will argue this as a disadvantage and reason not to use Spread Betting.
Personally, I have always disregarded the tax relief for losses. I believe If you going to into the business of trading without a positive mindset, then maybe this isn’t a business for you.
- Trade Over 10,000 Markets From One Account
I primarily (at the time of writing) trade shares. Mainly U.S shares. Spread Betting allows me to trade a very wide range of shares listed on worldwide exchanges. This is not so easy with a tradition share dealing account.
What else can I trade with Spread Betting? A brief look over at one of my accounts shows me I can can trade Forex, Bitcoin, Commodities including energies, metals and soft commodities, Indices, IPO’s, ETFs, ETCs & trackers and a massive range of shares from over 18 countries and more!
Whatever your choice of markets, I’m certain you’ll be able to use Spread Betting to trade them.
- Simple but Comprehensive Trading Platforms
When I first began to trade, I would make a phone call to my broker and give them my orders verbally.
I cannot remember the last time I gave an order over the phone, it must have been years ago and I think the only reason to pick up the phone was because I had an internet connection problem and couldn’t log in online.
Nowadays we’re spoilt for choice. I primarily place orders online by accessing my account on my laptop. However, accessing any of my accounts is just as easy using my ipad or even iphone. Most Spread Betting firms have fantastic online platforms or apps.
Most platforms are simple, nicely laid out and easy to use. Some are even customisable to make them looking just as you like. I’m just as happy to navigate the default layouts.
Spread Betting platforms and apps also offer some of them best free charting packages available.
My Spread Betting Firms of Choice
I have extensively used the following firms and can completely recommend their function and customer service:
You can go ahead and open up free accounts with either and explore their services.
Where To Next..
So thanks for reading this post, I hope it’s given you an insight into how I use Spread Betting to trade the markets. I’d love to hear about your experiences with Spread Betting and as always, don’t hesitate to ask any question.
Featured image by debaird via Flickr.com
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