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Should You Start FTSE Spread Betting?
By John | September 8, 2010
I have just seen the emergency budget being delivered but the Chancellor of the UK. As I return to my desk to view the financial markets I see that they are down by over 1%. For most people this is bad news, but for people who do FTSE spread betting they can make money in falling markets.
The vast majority of people don’t know what FTSE spread betting is or how to do it. Trading in this fashion is different to owning stocks. Instead you make a bet in the direction that the market is going. You go either long or short depending on which way you think the market is moving, long if you think up and short if you think down.
You can bet in a couple of different ways and you should choose one that suits your personality. The first style is called a binary bet. You decide how much that you want to stake and then when the markets close you will see how much you have won or lost.
There is an alternative way of FTSE spread betting and that is through the daily bet or the rolling daily bets. Probably the biggest difference between both bets is that the daily bets aren’t fixed in the amount that you can lose or ineed profit. With the binary bet you win the same amount no matter if you were just right or very right. With the daily bet options you will win a lot more being very right than being just right.
This can be a really great way of trading but if you get it wrong you may end up losing a lot of money. This is because you are trading with leverage and can lose more money than you initially put down.
It is up to you to decide if FTSE spread betting is suitable for you. One thing I do know that it doesn’t incur capital gains tax (CGT) in the UK. As the Chancellor put up CGT earlier today it does make it more appealing.
Topics: Stocks |
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