Spread betting is a great alternative to ‘normal’ trading, as it is tax free, and like CFD’s involves no stamp duty. The ‘spread’ is the difference between the price you buy at and the price you sell at. The best result for you as a spread better is as little movement as possible, which can make it a hard game to judge. However, traditionally there are markets that make much less dramatic jumps than others, and these are the ones that will serve you well.
Unfortunately, there are also risks involved in spread betting. Because the portion you are buying gives you access to more market, there is a risk you can lose more than you put in. This means you have to be extra cautious about the markets you enter, and also make sure you calculate exactly how much you can afford to lose, and try and work out how likely this is.
However, by paying attention, and investing cleverly rather than just going at it gung ho, it can be one of the best ways to invest. The best ways to reduce the chances of risks occurring are to pay attention to the market and also conduct thorough research. Understanding the market you are entering is very important, as investing in a market that makes sudden leaps may prove disastrous to you. Historically some markets remain mostly steady with only small rises and falls and these will almost certainly be best, especially for those starting out.
Another way to keep the risks low is to make sure you actively monitor what is going on with your account. Leaving it to someone else or simply forgetting about it will produce great risks, with many markets jumping massively within a matter of minutes.Overall the world of spread betting can be risky, but it can also be lucrative. With plenty of research, understanding and a hint of luck now and again, the returns can be enormous.