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FTSE Spread Betting Guide
By John | August 22, 2010
The UK Chancellor has just anounced the emergency budget and there are a few surprises in there. I can see that the stock market is down quite a bit. Most people who are invested in the stock market will lose money as a result of this. There is a way of making money when the market falls and that is through FTSE spread betting.
A lot of people don’t know what FTSE spread betting is. It is a way of trading the financial markets which is a bit different from owning the actual shares. You decide which way the market will go then you make a long bet if you think it will go up or a short bet if you think it will go down.
There are 2 popular bets that you can use. The first is the binary bet. This is very similar to bets in the sporting arena where you know the how much you can we or lose before you start. It is a very transparent way of doing it.
The second way of FTSE spread betting that I will go through is the rolling daily bet. These bets are probably the most common at the moment but the binary bet is becoming more popular. The biggest difference is that the actual amount that the FTSE moves is important in determining the amount you win or lose. If you are marginally right you will win a little but if you are very right you win a lot more.
Trading this way gives you great flexibility but at the same time it can be very risky. You trade on a margin so you are using leverage. This means you can lose more than your initial deposit if you get it wrong.
There are advantages and disadvantages to FTSE spread betting. Another advantage is that it doesn’t incur capital gains tax in the UK. Capital gains tax was increased in the budget today so makes this more appealing.
Topics: Investing |
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