New to Spread betting

Author: Getdealing

Author: Getdealing

Introduction to Spread Betting So what exactly is spread betting? Spread betting is a high risk, high reward way to play the worlds financial markets. The "spread" in the phrase Spread Betting refers to the Sell (Bid) and Buy (Offer) price quoted by a spread betting company. This price is calculated around the live market price of a financial product. If, for example, the live price of the FTSE was 4909 then the spread betting company may quote you 4908 (BID) 4910 (OFFER) The betting in the phrase refers as you would imagine to the fact that you are betting on the direction of the market. When you spread bet you are not actually buying the stock or index but are betting as to which way you think the market will move. You can bet per penny (in the case of shares) or per point (for commodities or indices) and the amount you bet is known as the stake , which can be from as little as 1, EUR1, $1 per point or penny movement. All Spread Betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax in the UK. Example 1 The FTSE live price is 4909 The spread betting company is quoting 4908-4910 If you think the FTSE will go up you BUY at 4910 for 1 per point If the FTSE live price goes up to 4960 the spread betting company may quote 4959-4961. You then SELL at 4959 Your TAX FREE profit would be your SELL price of 4959 minus your BUY price of 4910 multiplied by your stake (1) which = 49. Now lets say instead of the FTSE going up it actually went down to 4845 and you decided to cut your losses. Example 2 With the live price now at 4845 the spread betting company would be quoting you 4844-4846. Your LOSS would now be your buy price of 4910 minus your sell price of 4844 multiplied by your stake (1) which = -66 With spread betting you can bet on the market to RISE OR FALL. Lets look at an example where you think the market may fall. Example 3 The live price of the FTSE is 4900 The spread betting company are quoting 4899-4901 As you think the FTSE will go down you SELL at 4899 for 1 per point If the FTSE live price goes down to 4855 the spread betting company may quote 4854-4856. You then decide to BUY at 4856 Your TAX FREE profit would be your SELL price of 4899 minus your BUY price of 4856 multiplied by your stake (1) which = 43 Now lets say instead of the FTSE going down it actually went up to 4950 and you decided to cut your losses. Example 4 With the live price now at 4950 the spread betting company would be quoting you 4949-4951. Your LOSS would now be your BUY price of 4951 minus your SELL price of 4899 multiplied by your stake (1) which = -52 To Make Profits in Spread Betting you need to BUY LOW/SELL HIGH OR SELL HIGH /BUY LOW It doesnt matter which way round you do it! SPREAD BETTING IS A RISKY BUSINESS. There are ways to reduce your risk. PRACTICE ON A DEMO Account Our partners Capital Spreads provide a demo account where you can learn in a safe environment with a virtual 10,000. BET SMALL When you start to trade with real money bet at the lowest stake of 1 per point and only trade with money you can afford to lose. USE STOP LOSSES What is a STOP LOSS? A stop loss trade is one that is made in order to set a limit to the loss made by an adverse price movement. Its an instruction that you can give the spread betting company through their site or on the telephone if you wish. Lets look at an example. Example 5 The live price of the FTSE is 4875 then the spread betting company would probably be quoting 4874-4876. You think the FTSE will go up and buy at 4876 for 1 per point. You dont really want to risk too much money on the trade and you dont want to have to sit and stare at the computer all day so you enter a stop loss order to close your bet and automatically SELL if the price reaches 4845. At the end of the day you come back to look at the market and you see it has fallen to 4810. As you had entered the Stop Loss order to sell if the FTSE hits 4845 you should see on your spread betting account that you had indeed closed your bet at 4845 (or somewhere close to that price as stop losses are not guaranteed to be executed at the exact level specified). We believe every trader, no matter how experienced should always trade with a stop loss. Our partners at capital spreads offer an automatically generated stop loss feature as standard. By using Stop Losses you limit the amount of money you can lose to a pre-agreed amount (although stop loss levels are not guaranteed) How getdealing.com helps Once you have learnt the mechanics of how to spread bet you will need to understand what makes the market you are trading move. Markets move quickly and react to news stories, results and economic numbers instantly, making it imperative that you are kept informed in real-time. Sifting through countless news reports trying to pick out what is likely to move the market is a daunting task for the new trader. In the getdealing.com dealing room we act as a news aggregator, bringing your attention to the events that are moving the market right now. We cant tell you where the market will go but we can tell you when it is likely will move! Our market moving event calendar will show you all the scheduled economic releases that will have an impact on the market today. We show you what the market is expecting (the Forecast), what the prior number was (the previous), and we release the current data in real-time (the actual) If the number is considered to have a positive impact on the economy the number will be green and if negative will be red. By hovering the mouse over the i you can get a brief description of what the data means and why it is watched. The free getdealing.com live Trader Updates is a market commentary that brings you the real-time news and views of the many market professionals we speak with throughout the day. We monitor every news wire to deliver you only the stories and data that will be having an impact on the markets right now in a language you can understand and act upon. While the twitter commentary brings you the real-time events that are moving the market right now we have also added a selection of financial RSS feeds for general financial news. Every morning we publish a Morning Run Down to let you know the important events that happened in the markets overnight and tell you what to look out for today. Our live spread prices are provided by Capital Spreads and show the prices that you would be trading on right now in real-time. Watch how the live prices react to the data and news that we provide and learn what is driving the market. Try trading using our dealing room page to help you make your decisions. www.getdealing.comAbout the Author:

We are a free resource for spread betters providing REAL-TIME analysis, news and data in a clear format to give you the best chance of profiting from spread betting.

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