Are you interested in day trading spread betting? Spread betting is a high-reward, but high-risk strategy which grows ever more popular amongst traders. Its tax efficient nature means that for many it poses the perfect opportunity to make a quick and burden-free profit, one where the sky seems to be the limit in terms of what a person can bet on. The basic principles of the practise are the same as gambling, albeit that they are dressed up in rather more complex terms. Spread betters do not place bets, they buy or sell an index, thus they ‘trade’ rather than laying bets. This can be known as either going short or going long. When the ‘bet’ or trade becomes live, spread betters then hold the position. Ultimately, the trader is putting money down based on an expected outcome. Read on for more information about day trading spread betting.
Those already involved in day trading spread betting will know that spread-betting firms assist traders in the decision-making process by offering a ‘spread’ (basically a prediction) of how an index or a share might close at a certain time. Those who believe this spread is too high will sell, and vice versa. Generally, spread-betting focuses on indices, shares and commodities, although there are of course instances of novelty bets being placed. One of the most recent and famous examples of this is when a firm offered a spread on how often Mr. Darling, the Chancellor at the time, would sip water during a Parliamentary session.
Day trading spread betting is in particular the practise of buying or selling securities on the same day. Hence positions are only held for a matter of seconds, minutes or hours. Most typically, day trading spread betting is carried out in the stock markets and the Forex markets. Day trading spread betting can be profitable, if you have enough capital, a good strategy and if you are experienced, prepared to work hard and to react at lightning speed. It involves working with shorter timeframe charts and, as such, traders must be prepared to respond to the sharp moves which often tend to occur within a matter of minutes. Many money managers and professional traders warn against this type of spread betting as they believe the risks outweigh the benefits.
If someone carrying out day trading spread betting is successful, the profit they make is tax-free and there is no requirement to pay stamp duty. As day trading spread betting is a leveraged product, the initial amount of capital required is relatively small, whilst the profits can potentially be many times larger. However, it should be noted here that the leverage aspect means that, as with CFD or Forex trading, it is possible to lose far more than you originally invest.