Financial spread betting is a way of trading that has many advantages. As with anything in life there are also some disadvantages and I will talk about these as well. I would like to discuss both the pros and cons of financial spread betting so you will be able to make your own mind up.

Financial spread betting has actually been here for a long time. In fact it has been around from the 1970s but has only really got popular in the last few years. It is actually defined as betting which means that in the UK you don’t have to pay tax on any of your profits.

Have you ever wanted to play the currency markets but were unable to open a Forex account because of the capital requirements? Well you can play the Forex market from your financial spread betting account. This is great because you are able to trade Forex cheaper with the additional benefits.

Not only can you bet against currencies, you can also bet in a vast number of markets. You can bet on stocks, interest rates, indices, commodities and the list is almost endless. Better still you can do it all from the same financial spread betting account.

Leverage is also key in financial spread betting. Being able to trade on a margin can be very profitable for some. This may be a problem for some people. They don’t have a risk strategy and trade too much. You need to understand this before you begin.

My aim was to open your eyes to the opportunities of financial spread betting and I hope that I have achieved that. I do hope that you have enjoyed reading and are more aware of the benefits and pitfalls involved. Make sure that you are fully comfortable with the risk before you start trading.

If you are thinking about trading using financial spread betting then you need to think about selecting an account from one of the spread betting companies there are in the market. There are lots of them to choose from and it can seem quite overwhelming when you first start searching.

You need to take a step back and not be overwhelmed. This level of competition between spread betting companies is great news. You as a trader will get a much better deal as a result. We have even seen customer service standards increase. You must also realise that there are all these firms because they make a lot of money so think about that when you are selecting.

Most, if not all, spread betting companies are regulated by the financial services authority (FSA). You need to ensure that yours is too. This is a basic check and 99.9% of time not necessary but it is best to be sure.

If you are a beginner then you should be opening a dummy account. Many spread betting companies offer these accounts. Yes not trading for real more may not sound exciting and will not be exactly the same as the real thing but it is in your interests to do it. You will be able to test the software and can see what the firm offers first hand.

Most spread betting companies will try and give you cashback to persuade you to open an account with them. This is another example demonstrating the amount of money they are making from you. Everyone likes to be rewarded and cashback is no different. It shouldn’t however be your main reason for selecting an account. This is a great reason to open a second ‘back up’ account.

The crucial thing about selecting spread betting companies is the size of the spread. The firms make their money that way and it is what costs you your money. They don’t charge commission so it feels like you aren’t paying anything. Your costs are the spread. This is probably the most important thing to consider. This is what the winning traders use to make their selection.

I want to briefly run through some of the advantages of financial spread betting. As with anything though there are always some disadvantages.

Ok so the first advantage of financial spread betting is that you don’t have to pay tax. Tax can take a large chunk of your money if you are making a lot of profits. Under current tax laws you don’t have to pay any taxes on your profits, it doesn’t matter if your profits are huge there is still nothing to pay.

Having said that this is only useful if you are actually making profits. You won’t be able to offset any of your loses you make else where. And specifically in financial spread betting because of its leverage, if you do make losses and you don’t protect yourself well enough, the losses could be substantial.

The other great advantage of financial spread betting is that it is so easy to learn and it is very easy to short trade shares (or any other asset for that matter). This is a really useful feature as it is as easy to short as it is to go long. This gives you full flexibility in any market.

There are lots of different markets for you to choose from as well. You can relax knowing that you don’t have to restrict yourself to a single area. This means that you can diversify and benefit from lots of different market movements.

If you are using financial spread betting on assets that are valued in a different currency then you don’t don’t need to concern yourself with the risk of currency changes. Imaging I was making a bet on Coca Cola at £1 per point. The bet will weither lose or make £1 per on the movement of the asset and it doesn’t matter what happens in respect of sterling and the dollar in the mean time.

This means that you don’t have to consider in which way you think the currency will move, therefore you only have to think and make a plan for the asset you are betting on.

As already mentioned trading is risky so make sure you read all the available financial spread betting information beforehand.

Financial spread betting is fast becoming one the most popular ways that traders are making money online for a number of reasons. Here are some reasons why financial spread betting may be appealing to you.

Simple to understand.

Once you have seen how it works once, financial spread betting is extremely simple to apply to a vast number of markets. So, you decide on your stake. Your profit (or loss) is worked out by multiplying that stake by the number of point changes of the underlying instrument.

Number of markets.

There are lots of markets for you to trade in… equities, currencies, indices, commodities, bonds etc. and the number of markets keep getting more diverse. You can even use financial spread betting to make money from house price changes.

No tax to be paid.

There is no tax to be paid on of financial spread betting profits. Paying 18% tax can be a big drain on your profits so imagine not paying that will be a big positive. This does mean that you cannot offset any losses that you make.

Leverage.

While risky, if used correct, financial spread betting is a great way of taking advantage of a leveraged product. In a number of markert there is only a 3% margin requirement. Make sure you understanding what you are risking before you begin~Make sure you understanding what you are risking before you begin}.

Low capital start up.

You don’t need thousands of pound to start financial spread betting, you only need a financial spread betting account with a few hundred pounds in and you are ready to go. If you can’t afford to lose it then don’t risk it.

You will be able to short trade the market.

One of the biggest advantages of financial spread betting is your ability to trade on the short side of the market. Being able to trade short is a great advantage for a trader. Markets don’t trade up all of the time so if you only have long positions then you are missing out on some profits.

Financial spread betting has lots of exciting qualities but make sure that you fully understand the risks before you start. Remember it is leveraged so it is possible to lose more then you initially placed.