It may surprise you, but there is a way you can get involved in financial planning and trading without having to spend too much. Using the same level of skill, financial spread betting can, if successful, be very rewarding financially.
By spread betting, UK based traders can trade on markets in the US and just about anywhere else in the world. By using your money wisely and learning how to Spread Bet from companies such as City Index, you could make significant profits.
You can make significant returns as Spread Betting is margined or leveraged, similar to how you buy a house with a mortgage, meaning that you only need to deposit a small fraction (typically between 1% – 10%) of the total trade value in order to place the Spread Bet.
This means that your outlay is low, but your returns could be magnified.
Similarly, Spread Betting is also risky, with the potential to lose more than your initial deposit if you do not employ Risk Management tools to your Spread Bets. You can learn more about Risk Management through your Spread Betting provider, such as City Index.
In normal trading, if you own shares in a company, you actually own part of that company. The more you own, the bigger the share of that company is in your hands. Owning shares in a company carries a great deal of risk as well as potential reward.
Members of the public can only buy stock in a company if they’re listed on a stock market of some kind. The value depends on how successful that company is. People who want to own stock need plenty of patience, as jumping straight in could be damaging to your investment if you buy at a time when the stock’s value is falling. Researching the stock before investing is useful, as you’ll then be able to identify when the right time to buy is.
With financial spread betting, you can trade on stocks without actually owning them. You can spread bet on whether a stock or an entire market’s value will rise or fall and do this with several different shares.
While spread betting requires plenty of skill and know-how of markets, with little preparation, it could be worth your while. There are thousands of markets such as shares, currencies, indices and commodities to choose from, which is part of spread betting’s growing appeal.
As a leveraged product, any profits made could be significantly greater than your initial investment, as you only pay a small deposit of the total value you want to trade. Meanwhile, if you do incur losses, risk management tools are available, which will help to limit them.
Jeff’s note: I don’t do spread betting like this – It’s incredibly risky and I dont ever feel like I’d be able to sleep at night knowing that I owed on a bunch of stuff and my bet isnt coming through. As always, try at your own risk.