There are many differences and benefits that spread betting has over share trading. The biggest differences are that when spread betting, you pay no stamp duty, no commission, and no capital gains tax....
With financial spread betting you can make a profit by using your own judgment and knowledge to predict whether the price of a stock is rise or fall. While financial spread betting is not for everyone there are a number of valuable benefits to trading in this way over conventional share dealing.
There are many differences and benefits that spread betting has over share trading. The biggest differences are that when spread betting, you pay no stamp duty, no commission, and no capital gains tax. It is possible to profit no matter which direction the market is moving (i.e. you can profit even when prices fall), and you can trade thousands of different instruments all from the one account. So basically spreadbetting allows you to speculate on share price movements, while avoiding any brokerage fees or commissions.
Financial spread betting is based on a simple premise. If you think that a certain financial market or product will rise in value, then you buy the market/product. If you think that a certain financial market or product will fall in value, then you sell it.
Buying a rising financial market or product: After buying a financial market or product that you believe will rise in value, then if your prediction is correct, you can sell the market or product for a profit. (If you are incorrect and the value falls, you make a loss.)
Selling a falling financial market or product: After selling a financial market or product that you believe will fall in value, then if your prediction is correct, you can buy the market or product back at a lower price, for a profit. (If you are incorrect and the value rises, you make a loss.)
A spread betting provider typically quotes a spread around the real underlying market price and you can then place a spreadbet on whether this market value will rise or fall. Keep in mind that with spread betting you do not own the underlying asset you are just betting on the direction of the asset rising or falling.
Before you even start spread betting with real money though, I'd look for a simulator account to 'paper trade' the market to test your system. You'll be financially better off 6 months if you do this, before risking any real money, and it'll give you a chance to save for a decent amount for your subsequent spread betting dealings.
I review
financial spread trading sites like
ETXCapital and
PartyMarkets so you know which sites offer the best experience for you to spread bet at.
