Spread betting is an investment strategy where investors trade on the price movements of a wide range of financial markets including stocks, commodities, currencies, shares, indices and much more. As a spread bettor, you bet on underlying assets which you don’t actually own. You simply monitor and forecast the movement financial products and make profits out of such movements.
In this article, we have covered 15 important pieces of information pertaining to Spread Betting which your boss wishes you knew.
- When to expect a better spread
In a normal market environment, the best period to expect a better spread is at the beginning of the trading session when the volume of traded financial product is not very high. This is not known to many experienced spread betters.
- Losing money in spread betting
This is one of the most important pieces of information pertaining spread betting which you must be aware of. As much as you expect to make profits, you are also exposing your money to risks. You must, therefore, use some strategies to manage risks effectively.
- Stop and guaranteed stop
Your boss wished you knew the difference between stop and guaranteed stop. When managing ordinary risks, it is recommended you use stops. When there are unforeseen uncertainties in the marketplace, guaranteed stop are recommended. In other words, if you want to cover your risks better, guaranteed stops would be a better option.
- Conventional share
Buying or selling conventional share is a different thing from spread betting. You must understand the different between these two financial investment strategies. There are several reputed spread betting service providers which allow you to learn before you risk your hard-earned money on spread betting. One of them is CMC Markets. You can take a glimpse of how their trading platform looks like.
- Several companies offer sports spread betting on a wide variety of sporting events. Soccer is one of them, and here you need to understand the differences between moneyline vs point spread soccer betting.
- Liquidity in spread betting
Your boss also wishes that you knew the importance of liquidity in spread betting. The higher the liquidity of a financial product the better you will be able to manage risks.
- Intricacies in spreads
There are many intricacies involved in spreads. For instance, you may set fixed buying price for a certain financial product but your spread betting company decide to buy it a lower price and stay with the difference. Service providers always dictate buying and selling prices of spreads.
- Compulsory stop losses
As a trader, you must be aware of compulsory stop losses. If you don’t have stop order in place, many spread betting providers will put their compulsory stop losses measures to ensure that you are not eliminated from the trading platform.
- Different service providers use different price ranges when switching on stop losses. You must be aware of this.
- Order cancellation
Another thing which they wish you knew is order cancellation. However, this happens automatically in many spread betting companies. It is better for you to find out whether your service provider offers automatic order cancellation.
- Dispute resolution mechanism
Dispute resolution mechanism is also another piece of information that they wish you knew. As a serious spread better, you are supposed to know how this mechanism works and to use it for your own benefit.
- Margin requirements
As a first-time spread better, you must also be aware of your margin requirements. You must know when to put more margin money and when to put less. This is one of the ways to minimize risks.
- Overnight holding fee and spreads
It’s not easy to make a good profit by trading fast-moving a financial product as it is. It is, therefore, essential to keep an eye on the costs. One the ways to do so is to pay close attention to certain fees such as overnight holding fee.
- Spread betting types
There are different types of spread betting which your boss wishes you knew. These includes day trading spread betting, short-term spread betting, medium-term spread betting, and long-term spread betting. All these require you to know the risks involved and how to manage them.
- Last but not least, another piece of information your boss wishes you should know about spread betting is that any proceeds you make in the United Kingdom are tax-free. This means you don’t have to pay capital gains tax, income tax or stamp duty. This is one of the most interesting features of Spread Betting.
Conclusion
These are just a few of important facts about spread betting that every first-time spread betting participant should know.