Financial spread betting is
a tax free*, cost effective alternative to traditional share
trading. It allows you to speculate and trade online on
the movement of stocks and shares without using a stockbroker,
therefore you do not have to pay commission or fees on your
online trading.We make a spread around the live, underlying
market price and you can bet on whether this market
will rise or fall. We have demonstration
financial spread betting accounts and a beginner's
guide to financial spread betting available for you
to begin your online trading experience with E*TRADE Spread Betting, or sign up now for our live online
trading account.
How does financial spread betting work?
The "spread" in the phrase financial spread betting
refers to the Sell (Bid) and Buy (Offer) price quoted by
a financial spread betting company. This price is calculated
by adding additional points around the live (or the estimated
future) market price of a financial product. For example,
if the Daily FTSE is trading at 4729 our quote might be
4727-4731. At E*TRADE financial spread betting, only
small deposits are required to open a new position (as little
as £10-£40 for a £1 bet depending on the
market concerned). Once you have chosen the market
on which you wish to spread bet, you can then bet the stake
of your choice, which will represent your profit or loss
per point movement in that market (each market has its own
individual maximum allowable stake).
You can then bet £1 (or $1 or €1) per point/tick
on the movement of spread prices that we quote. You can
choose to bet that the market will rise, or alternatively,
you can bet that it will fall. If you are right, you will
make a profit of your stake multiplied by each point that
the market moves in your favour. If you are wrong you will
make a loss of your stake multiplied by each point that
the market moves against you. For this reason you
must be aware that your losses can increase dramatically
if the markets move substantially in the opposite direction
to your bet (e.g. if you make an Up Bet in the FTSE 100
and instead of going up it goes down). All financial
spread betting profits are recognised as the winnings of
a bet, and are therefore free of Capital Gains and Income
Tax in the UK*.
Try a Demo Financial Spread Betting Account
If you are new to financial spread betting, we highly recommend
that you sign up for our online Demo Account. The Demo Account
mirrors our live trading system in all respects, other than
the requirement for depositing funds! Used in conjunction
with our online Financial
Spread Betting Beginners Guide you can really get to
grips with the concept of spread betting or familiarise
yourself with our trading platform before you begin Live
Trading.
Why should I spread bet?
Financial spread betting allows you to bet on a huge variety
of financial products in one place and in one currency.
You make your bets in one of 3 currencies (sterling, US
dollars or euros), which means you do not have to bother
with costly exchange rates and can, in general, trade in
your own currency.
Spread bets are margined trading products, which means
you need only deposit a small percentage of the full value
of your trade leaving your excess capital to continue working
hard elsewhere. For example, a £1 bet on a share is
the equivalent of buying (or selling) 100 real shares. On
most shares our minimum Initial Margin Requirement (deposit)
is 3-5% of the underlying value of the shares which means
that you can take a bet in a share with as little as 1/30th
of the money required to buy the actual real shares from
a stockbroker. Also, because E*TRADE financial spread
betting is not a stockbroker, we do not charge commission
or fees. We make our profit from the spread we add to the
underlying market prices, which result in our quotes. Plus,
don't forget, that UK residents benefit further because
your profits do not incur Capital Gains and Income Tax*.
Whilst financial spread betting offers many benefits,
it is important to note that it carries a high level of
risk to your capital, so you should only bet with money
you can afford to lose. Whilst we offer compulsory
stop-losses, it is possible for you to lose more than your
initial deposit. To read more about the risks, please
view
our risk warning here.
What are the advantages of financial spread betting?
- Bull or Bear
One of the most obvious advantages of financial spread
betting is the unique opportunity to go short of (or sell)
a stock or share. You can therefore experience the benefit
of either a rising or falling market!
- No Commission or Fees
Because E*TRADE Spread Betting is not a stockbroker,
we do not charge commission or fees. The only 'fee' is
the spread we charge on the prices that we quote.
- Gearing
Financial spread betting also allows you to trade
in sizes smaller than those usually available in the underlying
market. Similarly, you may also benefit from an opportunity
to trade in larger positions than are normally permitted
in the underlying market, without depositing large sums
of money.
- Tax Free Profits
All financial spread betting profits are recognised
as the winnings of a bet, and are therefore free of Capital
Gains and Income Tax*.
- Tight Spreads
At E*TRADE Spread Betting our mission is to provide
value for money plus top quality service. In some cases,
you will find that our spreads are extremely competitive
in relation to the underlying, live market quotes.
For example, our Daily Rolling FTSE spread is just 3 points
and our Daily Rolling Sterling/Dollar quote is just 4
points. Compare our spreads to that of our competitors
- Limit your Risk
Financial spread betting is a high-risk activity,
but at E*TRADE Spread Betting we want you to enjoy your
online trading experience. The automated stop-loss facility
we provide is an invaluable tool which encourages you
to understand and control your risk. However, you must
be aware that stop losses are not guaranteed.
Your stop-loss is set according to the funds available
on your account up to a maximum computer-generated level.
You can amend your stop-loss to suit your needs. We also
hold an additional 20% of your funds to allow for slippage
or a market gap.
What are the risks of financial spread betting?
Although you can make substantial profits from financial
spread betting, if the markets move against your bet, your
losses can also be substantial and although E*TRADE Spread Betting has a policy of attempting to limit client losses
on bets by applying an automatic stop–loss to each
bet you make, these stops are not guaranteed. As a
consequence, if a market gaps, you may lose more than your
initial deposit.
Click
here for the full risk warning
Why should financial spread betting interest me?
Financial spread betting appeals to a wide variety of individuals
who want to take advantage of the versatility and great
value that spread betting can offer.
Experienced
investors use financial spread betting as an additional
trading tool as the spreads we offer rival the prices available
in the real market. Alternatively, many investors use spread
betting to hedge their existing share portfolio. For example,
if you have some shares which are decreasing in value in
the short-term, you could 'Sell' the value of the share
using a sell bet with E*TRADE Spread Betting and possibly
make a profit to counter-balance the decreasing value of
your shares.
You do not need to be an experienced investor to spread
bet, but you do need to research the products that you wish
to trade and be aware of the risks associated with spread
betting. Many individuals new to spread betting use technical
analysis to guide their investment decision. E*TRADE Spread Betting provide charts for every product we quote to assist
you with your technical analysis.
One of the problems for spread betting companies is the
word ‘betting’ as this gives a false impression
to the marketplace. Spread betting is in fact a highly adaptable
trading tool. With an E*TRADE Spread Betting account
you can trade in many financial products using just one
currency – we offer prices on UK, European & US
shares, World Indices, Commodities, Foreign Exchange, Bonds
and STIRS (Short Term Interest Rate). You can bet on the
Cash, the Future or our new Rolling Daily products.
Glossary: Underlying
Markets : our quote is always based upon the prices
received from the various financial exchanges around the
world. These prices are the 'underlying markets'.
*Tax laws are subject to change |
