Financial spread betting is a means to give investors a chance to engage in trading across financial markets even without the need to physically own a certain financial instrument. Thus, the investor can bet or speculate on whether or not the direction of a certain financial instrument is to go up in price or to go down in price. The investor could speculate on a wide array of financial instruments ranging from shares of stocks, foreign exchange, stock market indices and commodities without any policy that they should own the investments that they wish to speculate on.
Financial spread betting in financial markets entails some standards in the size of contracts. For instance, the FTSE 100 has a standard market size of £10. Through financial spread betting the speculator lays down how much would be the size of his stake. It could for instance be placed at £3/point. The settling of the bet would then consist of the difference between the "buy" price as well as the "sell" price
Financial spread betting is really an adrenaline pumping means to speculate on whichever is the apple of your eye among the markets. It could be the stock market, the commodities market, the forex market and even the stock indices. One can even choose how little or how much stake to put in for every trade. Another good thing about this investment means is that spread bets are free from CGT (capital gains tax). Thus, one can actually invest without thinking about the cuts on their gains because of the taxes. This is unlike the conventional means of share trading for instance wherein capital gains tax is applied in the different countries that it is freely bought and sold.
Financial spread betting entails great risks. It is not for those looking for a stable means of income as their retirement is nearing. It is not for those wanting a constant cash flow by the time their children go to college. Its riskiness sometime makes it daunting even to those experienced professionals in the industry. To minimize the risk, it is thus important to learn first the nitty gritty or the intricacies of spread betting even before you place good money to start your speculation. Even with its riskiness, there is still an upside to financial spread betting. It is in fact considered as an easy and cheap way to invest. The basics are really not hard to fathom. Even if there is the possibility that you can incur large losses, there is also the possibility that you can win big. If you just foresee the market rightly, the big gains can be yours. Just don't be too confident that it will be roses at all times because it is not at every turn that you can make the right decision.
There are more articles that will help broaden your knowledge about financial spread betting. Go through the links and learn the basics. Get advice from the experts in the field on how to go about it. Just be open to learning and risk taking and the financial rewards would soon follow.
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