Financial spread betting has become so popular because it allows users to speculate on the movement of different financial markets such as stock indices like the FTSE 100 or S&P 500, FOREX (foreign exchange) markets, commodities, securities and interest rate/bonds.
By either betting long on a index in the hope of it increasing in price or short-selling (borrowing stock from the broker than selling it on as the price rises, keeping the difference in profit) you can make a lot of money correctly predicting the markets.
In terms of how to start spread betting, you’ll first need to choose one of the many spread betting platforms to open up an account with. You can start with a Demo account, which gives you $50,000 in free money to practise trading with and executing stop-loss or trailing order. You can monitor positions, research the technical analysis charts or even look up how the fundamentals and economic externalities affects the market.
Anything could affect the market, such as the latest weekly US budget reports, crude oil prices, government fiscal policy etc…
When you’re ready to open an deposit spread betting account all you have to do is contact support to upgrade it. One you’ve done this, you can begin your first trade which involves looking up a particular stock or index to wager money on and then look up the “offer” (buy) price. If you think that the price will increase than you can wager money or “spread bet” on that price increasing.
The price that is closes at is the “bid” or “sell” price. This is always slightly lower than the “offer” price because that’s how the broker/spread betting platform takes its commissions. Crucially, the difference between the offer and bid price is known as the spread. Your typical spread will be just 1 point (pip), so for example the offer price of Microsoft stock could be 150p and the bid price will be 149p.
In contrast to fixed odds betting, spread betting involves wagering money on pip or points movements, which normally starts from £1 per pip. If you bet £1 per pip on Microsoft stock in increasing from 140 and it closed at 150 than you’d have made £10 profit.