If you are looking to get a better understanding of spread betting, then there are few basic areas of understanding you should cover. In particular, if you are new to it, you may be struggling to know where to start. It might seem like there is just too much information to get your head around. However, courses can be a good way to start. They will break the information down into smaller bitesize sections. This way you can get a comprehensive introduction to spread betting, one section at a time. Listed below are some of the areas that a spread betting course will cover, and how this will help with your understanding of spread betting.
What is spread betting?
If you’re completely new to spread betting, then this is likely to be one of your first questions. What exactly is spread betting, and how does it work? it is a form of financial derivative trading. This means you don’t own the underlying asset on which you are taking a position. Rather, you speculate on price movements of global financial markets. Spread betting is what is known as a leveraged product. This means you only need to deposit a smaller initial outlay to get exposure to a larger position. There are both advantages and disadvantages to leveraged trading, which will be looked at below. Spread betting courses will provide plenty of detail about what exactly it is, and will normally supply some helpful examples of trades.
Advantages of spread betting
Some of the advantages of spread betting include the ability to go short, the fact that there is no stamp duty to pay, and that it is leveraged. The ability to go short means that not only can you profit from rising markets, but also falling ones. Spread betting is only available to residents in the UK. Any profits are currently exempt from capital gains tax (CGT). There is also no stamp duty to pay. Finally, because it is a leveraged product, you only need to deposit a smaller initial outlay to get access to larger amounts. This means your capital goes further, and can be used for other investments.
Risks of spread betting
As with any trading, there are certain risks which come with spread betting. Spread betting courses should explain these risks to you, but should also educate you on how to manage them. For example, as a leveraged product, you get greater exposure to the markets. While this can mean greater profits, you can also make large losses if the market moves against you. It could be possible to lose more than your initial investment. A spread betting course will tell you how you can manage your risk to try and minimise losses. This could include explaining how to add a stop-loss order to your trades. When a stop-loss order is added, your trades can be closed out at a certain price point pre-determined by you, reducing risk.
A spread betting course will cover much more than just the few areas listed above. To really prepare yourself as a trader, you should take advantage of all the information available before you trade.