subject: Is Spread Betting Gambling? Why is it Gaining so Much in Popularity? [print this page] Financial spread betting is gaining popularity in Europe particularly the UK. Even though it existed for years, it is now becoming available online and much like other competing industries many companies are now seeking to recruit even more clients by offering lucrative incentive offers such as welcome bonus.
What is the Spread?
Financial spreadbetting is available for a whole range of financial instruments including stocks and shares, currency trading, commodities, indices, bonds and just about anything with a value.
The spread amounts to the difference between the bid and the offer price and is where the spread betting provider makes a profit. For example if Apple stock is currently being quoted at 282.52 - 282.95, then the difference between these two prices constitutes the spread. You can either go long at 282.95 or short at 282.52
Is Spread Betting Gambling?
It is widely regarding that spread betting is a form of gambling. In fact this quality of the product allows spread betting to remain tax free which makes it more attractive than forex and stock market trading. This basically means that unlike the money you make from investments made on the stock market or forex trading, on the spread betting profits you will pay zero tax.
The Real Advantages of Spread Betting
However, the real advantage of spread betting is that it allows you to leverage your money and deal in bigger sizes than would otherwise be possible. However this cuts both ways and leverage can increase not only potential profits but also accelerate the pace of losses if one isn't careful. There are many ways that traders can use to control the risk; the most common of these being the utilisation of stop loss orders and stake sizing.
Another reason as to the continued growth and popularity of spread betting is the fact that you can make money even if the market is falling and we all know that we are trading in dangerous times these days. This means that you can make money even if the company's stock price that you wish to trade in is falling in value; all you need to do is to open a down bet on it.
Is Spread Betting Gambling? Why is it Gaining so Much in Popularity?
