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Introduction to spread betting

Created:
3 July 2008
Updated:
19 November 2008
Written by:
Dominic Picarda

If you think an asset is going to go up or down in the near future, spread bets are a great way to make money from your idea.

Unlike dealing in shares, you pay no stamp duty on spread trades, nor are your profits taxable.

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You can make money from asset prices falling as easily as you can from them rising.

Spread betting enables you to speculate on a huge range of financial assets: shares, bonds, interest rates, foreign exchange, commodities and even house prices.

You can do all this from one single account and without ever changing currency.

What is spread betting and how does it really work?

Introduction to spread betting: Spreading the risk

What can I bet on with spread bets?

There are a huge variety of markets you can bet on via spreads. You can play the equity, bond, interest-rate, commodity and foreign exchange markets without ever changing currencies.

• Spread betting to reduce your housing risk

You can also use spread bets and other derivative products as ways to invest in commodities and foreign exchange. See our free investment guides to commodities and foreign exchange (under Alternative Investments in the left-hand navigation) for more on this.

Which firm to use?

More and more firms are offering spread betting, so it can be hard for the newcomer to choose which one to deal through. We show you how to pick a provider here:

Platforms and providers

Trading strategies

• Have you got time to spread bet?

• How to stop losses on spread bets

• Winning strategies for spread betting

• Using technical analysis to spread-bet

• Using Gann techniques to spread bet

• Short-selling using spread bets

• How to hedge a long position with spread bets

• Protecting your investments with spread bets

• Watching the pennies

• Four tips for improving your spread betting

• Clever uses of a spread bet (part 1)

• Clever uses of a spread bet (part 2)

What can I save by spread-betting?

Making tax-free profits can be a huge advantage of spread betting over dealing in physical assets and some other derivatives. These two guides set out all the potential savings, as well as some of the disadvantages:

• Using spread bets to pay less tax

• Spread betting tax tactics

How much does it cost to borrow or "gear up" my spread bets?

Gearing or trading on margin is how we make big profits with only a small upfront stake. You can easily make 100 per cent return off a 10 per cent price move. But this isn't money for nothing, as we explain here

• The true cost of borrowing to spread bet

• Spread betting margins made easy

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For more detailed examples about how spread betting works and investment other investment information from Barclays Stockbrokers please click here

What does all the jargon mean?

Spread betting is beautifully straightforward but some of the terms used can be off-putting at first. Check out this explanation of the jargon:

• Glossary of spread betting terms

Do spread betting firms always play fair?

Punters do complain about spread betting firms from time to time, and sometimes they're justified to do so. Make sure you understand how bookies operate by reading these insights:

• How spread betting prices are generated

• Spread-betting myths: prices skewed against you

• Spread betting myths: orders not filled at your price

• Spread-betting myths: stop-losses taken out

• Spread-bettng myths: being requoted or turned down

Real-life accounts:

Read an interview with Sally Nicol, author of Bets & The City, who spent a year trading and wrote about her experiences.

• What spread-betting Sally did next

OTHER INVESTMENT GUIDES:

For more on short-term trading, see our other investment guides:

Fixed-odds and binaries

Contracts-for-difference (CFDs)

For investment guides on other subjects, use the sub-navigation at the left-hand side of the page.

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Spread your risks with spread trading

With so many big moves in the world's financial markets, there have seldom been more opportunities around for spread traders. Isn't it time you joined them?

by Dominic Picarda