Financial Spread Betting (page 3 of 9)

Advantages of Spread Betting

There are various advantages to spread betting over traditional share dealing or fixed-odds gambling.

1) Profits are free of capital gains tax (CGT). This might be important if you would otherwise trade in large quantities of shares.

2) Spread bets can be made partially on credit.

3) You can close the bet at any time. The amount you make or lose will then be determined by the current spread quoted, which may be different to when you opened the bet.

4) Profits can be theoretically limitless and are not set in advance. Conventional betting gives you specific odds so you know just what you could win. With spread betting you might bet on the FTSE100 index going higher than 5510, but the higher it goes the more you make with no theoretical upper limit.

5) Most bookmakers will allow you to set a stop-loss to limit your potential losses. Without this your potential losses, just like your potential profits, could be theoretically limitless.

6) You can go 'short' on a stock or index, which means you can profit if it falls. To do this with a normal stock broker can be difficult to arrange and you are limited to just a few days usually, whereas with spread betting you can short stocks or indices for far longer.

7) No stamp duty is payable on spread bets, unlike when buying shares.

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