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    Home > Forex Spread Betting > What Is Spread Betting


      What is Forex Spread Betting?
       
      Spread Betting has grown hugely in the last few years due to the easy accessibility of online trading platforms allowing individuals to buy or sell small or large amounts, with just a small investment. Previously having to use a broker would normally mean higher minimum purchase amounts and higher fees. Now online platforms can offer simple self managed speculating on stocks and currencies.

    The word 'Spread' actually refers to the price difference between the buying and selling prices of the currency pair you are looking to trade. Simply put this is the profit margin for the trading company you are buying from. They are not worried if your trade generates you profits or makes you a loss, they make money every time you trade, but then they are providing you the ability to Virtually trade in the form of Spread Betting.



    EUR/USD Buying and Selling Prices


    In Spread Betting you do not own the financial instrument you are speculating on, in this case the currency. There are pros and cons for this, teh main feature of spread betting is large leverage you can use to speculate. Will just a few hundred pounds you can speculate on movement as though you owned tens of thousands of pounds of the currency.
       
      The Difference Between Spread Betting and Real Forex Trading
       
      The main attraction of Spread Betting is that it is free from Capital Gains Tax. The other abilities such as leveraged purchasing, ability to go long and short (Speculating if a trade goes up or down) and close spreads are available in Real Forex trading and in Spread Betting. The attraction of Real Forex trading is that you actual own the currency you are speculating on, if you have not used a massive amount of leverage it may be easy enough to purchase the currency outright adn use it to purchase goods or services, cash being the most tangible asset.

    For investment purposes actual Forex Currency Trading is the safest and most long term solution. We use vast investments and resources allowing us to make the most of the physical currencies we control. For smaller investors who want to manage themselves and are looking to profit from currency fluctuations but do not have any intention of ever owning the currency outright, spread betting may be the best solution. However as attractive a high leverage is to produce huge profits, traders must be aware that this also makes losing there whole investment a lot easier. For those choosing Spread Betting we do recommend ensuring that you do not strecth yourself too thin, either by leaving adequate financial backup to ride out a trade or by setting strict stop loss limits. Also signing up for a free practice account before speculating with real money, will be time well spent.




       
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