Trading News Feed | Trader Hideout

Spread betting can be used in a wide number of markets and even for trading on things such as General Elections, but there are five main markets that a professional spread trader could use and usually a spread trader will specialise in a certain area of one of these. To make real money, you need to know your market inside out. Here is a short explanation of each:

In an earlier article we talked about the top three beginner mistakes in spread betting, but of course these are not the only mistakes that beginners can make. There is a lot of money to be made in spread trading and so it is only natural that it attracts a lot of interested parties keen to make a killing and not so keen to spend time learning how to do it properly. To avoid making a real loss, here are a few more mistakes to avoid:

Ok, so now you’ve discovered spread betting; read all about it and decided you want to have a go. Perhaps you’ve made one or two trades and turned a profit. You are now officially a spread trader and are keen to get going and start earning enough to cover the mortgage. All professional spread traders have one thing in common, they are consistently careful so here are the top three beginners mistakes to avoid when you are still new to spread betting:

Financial spread betting first started in 1974 and spread betting on gold was one of the first areas where spread betting became popular, probably because of its inverse correlation with the equity markets.

When you first start looking into financial spread betting, it can feel as though you have entered an entirely strange new world with a language all of its own.

Spread betting, or spread trading as it is often termed by the professionals, has only been around for approximately 25 years, not particularly long.

With the current economic climate being as it is, people everywhere are feeling the pinch whether they are in debt or not.  The return on savings has all but disappeared, pensions have fallen drastically and the value of many a portfolio of stocks and shares has decreased dramatically. Yet there are still people making money, and lots of it, during the recession and many of these are spread traders.

When professional spread traders tell people what they do for a living, there are always the odd one or two who will say that all they do is gamble for a living. Indeed this theory seems to be backed up by the Inland Revenue who would term them ‘professional gamblers’ and the general term for spread trading being called ‘spread betting’.

Spread betting is similar to actually buying shares on the stock market, except you can actually make money when the shares decrease in value if you anticipated that would happen.  However, if you made money by trading shares on the stock market you could be open to income and capital gains tax whereas because spread betting is deemed ‘gambling’ under UK law, you will benefit from any gains being tax free.

Some people see spread betting as a way to make fast cash and as a result they place short term spread trades, such as betting on the movement of a share or stock or currency over the course of just one day, otherwise termed day trading.  Short term spread trading is actually much more of a skill than longer term trading and so many people who have gone for this option rather than longer term spread trading had their fingers burnt and quickly declared spread betting as high risk gambling.

Strictly speaking, you do not know the outcome before you decide on a spread trade so it is gambling. But unlike most gambling activities, you can increase your chances of making a profit through learning the market you are spread trading in.

With everybody watching their pennies during these tough financial times, every person needs to make the most of their income and minimise tax expenditure wherever possible, so is the profit from spread betting really tax free?