Spread betting is a type of financial trade which allows an individual to assess the movements within financial markets. Market prices commonly rise and fall in Spread Betting. Traders who sign up with an Spread Betting account with brokers can speculate on whether markets will go up or down in value and then hold on their decided positions. You can choose from a large range of financial markets, across the globe, these include: stock indices, currencies, shares and commodities.
Spread Betting is a popular form of trading as it is a leveraged product. This means you can begin with a small deposit and still access a large proportion of financial markets around the world. Traders assess markets by determining a ‘buying’ price or a ‘selling’ price. The trader can then choose a market and then decide whether to ‘buy’ or to ‘sell.’ If a trader speculates that a market price will rise, a spread bet is made at the ‘buying’ price and in a similar way if a trader decides that the market will fall, then a spread bet is made at the ‘selling’ price. Ultimately, Spreading Betting involves a trader deciding whether to go long or to call it short. Once a Spread Bet is made and a movement occurs the trader will then either profit from the amount it moves in their desired direction but if the wrong call is made and it moves in the opposite direction the trader suffers a loss. The more the market moves in either direction determines how much profit is made or how much loss occurs.
A trader’s deposit acts as a small percentage of their total introduction to financial markets and the potential profits that can be made.