Financial spread betting is effectively
buying or selling a financial product without actually owning
it. Therefore, the criteria for buying and selling is the same
as if you were buying shares. You are forming an opinion on
the relative success of companies and commodities.
How accurate your opinions are will be the
main thing that dictates your success in financial spread betting.
In order to properly form opinions on individual markets you
must know about the company/commodity you are trading on, what
the experts think of this commoditiy, general trends in this
commodity and the shape of the market to come.
If you consider that you will be competing
against the person setting the odds, you will want to know
as muh as you can to gain an edge. Once you have selected your
company/commodity to trade on you have the following options.
Shorting...
This is when you sell commodities in the
spreads in the hope that the price of these commodities will
drop over time and then you can buy them back and make a profit.
Hedging Spreads
hedging is where you make a spread bet to protect
another bet or investment. For example, if you own shares and
think the price may fall you could sell them. The only trouble
with this is that you would pay Capital Gains Tax. therefore,
you could make a spread bet on these shares dropping and if
they did you would effectively break even without paying the
tax.
Arbitage Spreads
Arbitage spreads are when you can exploit
the odds at different spreadbetting companies with a no risk
bet. For example, if one company sets a share spread at 50
pence and antother company set it at 70 pence you could make
a spread bet that exploited the difference.
For more advanced tips and resources please take a free look at our members section.