trading forex

From trading platform to trading and trading strategy, you will find everything you need to get started with spread betting and online trading on this page.

What is Spread Betting?

Spread betting is a relatively straightforward trading method that gives you access to a range of global markets through a single broker. You can get started with spread betting as follows:

  •     Forex
  •     Stocks
  •     Commodities (gold, silver, aluminum)
  •     Bonds
  •     ETFs
  •     Futures
  •     Options
  •     Cryptocurrencies (Bitcoin, Ethereum, Ripple, Litecoin)

In spread betting, you never actually own an asset. Instead, you simply shadow the underlying asset you are trading. Investors speculate on whether the security's price will rise or fall based on the broker's suggested prices.

In UK reviews of spread betting, this type of trading is often branded as pure gambling.

However, this is not entirely fair. In the UK, this is an instrument that is fully regulated by the Financial Conduct Authority (FCA).

Switched on spread bettors and traders hone their craft and trade with a similar mindset to day trading stocks, futures and other traditional instruments.

forex broker

How it works.

They trade instead of just placing a bet. Once the bet is active, you hold your position until the opportune moment presents itself.

Spread betting brokers offer you a prediction (spread) where they believe a certain stock or index will close at a certain time. You will then trade (bet) on the accuracy of this estimate.

So if you think the prediction is too low, you can "buy" on the price. Alternatively, if you think the spread is too high, you can "sell".

Example of spread betting

Let's say that BMW opened the day at 10€ and you want to trade short term movements in their stock. Perhaps you see a log in Exness quote of 10.00€ to 10.01€ (the spread). However, you believe the stock will trade higher, so you buy at 100€ per point movement at 10.01€.

If BMW ends the day at €10.05, that's four points higher than the company's buy price. So you would gain €400. If Waitrose ends the day two points away from the buy price at €10.03, you would have to cough up €200.
Advantages of spread betting

Why do more and more people want to spread bet for a living? For several very good reasons. All of these reasons are explained below.

  •     Minimal capital required - You will need far less capital to make a large outlay than you would to trade traditional instruments. Going back to the BMW example above, you would need tens of thousands of € to make the same bet.
  •     Regulation - Spread betting is regulated in many countries, including France, Germany and the UK. This gives you certain rights and protects your money from a number of situations. Not to mention, regulation protects you from spread betting scams.
  •     Access - Spread betting gives you access to numerous global markets. From stocks and cryptocurrencies to equities and interest rates. You also have the option to trade 24 hours a day, so you can fit spread betting into your lifestyle.
  •     Commission Free - Trading costs can quickly skyrocket if you make a high number of trades. However, spread betting is usually commission-free. Instead, the costs are included in the spread.
  •     Leverage - Many brokers offer trading with leverage. This allows you to borrow capital to increase your position. This could significantly increase your profit potential. The flip side of the coin is that this can also magnify losses. Therefore, spread betting without leverage is considered by many to be far safer.
  •     Arbitrage or Hedging - Combining spread betting can result in "abitraging" opportunities, or allow the trader to "hedge" other derivative holdings.