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Learning Alternative Ways To Invest

The Financial market offers lots of different ways to make money from investments. Spread betting is a way of making money but without having to buy any assets. The term comes from the ‘spread’ of financial costs of a trading price. This means traders buy at a higher price than the market price and sell at a lower price. Therefore, money can be made by gauging whether the financial price will fall or rise above a given spread. You can trade all day in most cases, depositing only a fraction of the amount of your position (or margin). As a leveraged product, the potential for profit or loss is usually a lot higher than with traditional trading methods. Most online platforms offer mobile applications to make trading even quicker and easier.

Why choose Spread betting?

Spread betting is tax-free because it is categorised as legal gambling. You therefore will be tax-exempt on any profit that you may make. As spread betting works as a leveraged product, you will not have to buy assets in order to trade. It is very easy to open a spread bet; most bets are carried out in under a second. The three essential things you need are on which market you will place your bet, the size of your bet and whether you will buy or sell. Placing a bet on the direction of an assets price means you can ‘shoot the market’ or bet on falling and rising markets. There are other costs involved in spread betting depending on how long you hold your position or what you choose to trade on and your understanding of risk management. At the end of each trading day, spread betting accounts are reviewed and a charge is levied according to whether the outcome was positive or negative and the holding rate fee on what you were trading on. There is a huge range of markets on offer which may include:

  • Foreign exchange currencies (Forex)

  • Indices

  • Shares

  • Commodities

  • Interest rates

  • Binary Options

  • Options

If they can successfully read the market, traders can make money. Traders who believe the market price will increase, buy or ‘go long’; their prices will then rise in line with any increases; or sell and ‘go short’ – similarly, a decrease in the price can earn a profit. The most important thing to remember when spread betting, is that knowledge is everything.

There are vast rewards to be made but there is the risk that you could potentially lose everything. A number of platforms are available online that can offer help and guidance for traders who are new to spread betting. Most offer new clients incentives and special offers when they begin trading. These may allow trade to begin with as little as 10p per point for beginners for example, meaning they will be at a lower risk when they start trading. There are other options such as allowing a higher stake that gives the trader a guaranteed stop after losing money on a trade or limited risk, which means you cannot trade once you have depleted your funds.

CMC markets offers a range of ways in which to trade on the stock market. Among these, spread betting is at the forefront. The company has had over twenty-five years’ experience in spread betting and has won several awards including Best Spread Betting Provider in the UK at the 2015 Investors Chronicle & Financial Times Investment Awards.

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