What are the advantages of spread-betting?

Bull or Bear
One of the most obvious advantages of spread betting is the unique opportunity to go short of (or sell) a stock or share. You can therefore experience the benefit of either a rising or falling market!

No Commission or Fees
Because firms like Capital Spreads are not stockbrokers, they do not charge commission or fees. The only “fee” is the spread they charge on the prices that we quote.

Gearing
Spread betting also allows you to trade in sizes smaller than those usually available in the underlying market. Similarly, you may also benefit from an opportunity to trade in larger positions than are normally permitted in the underlying market, without depositing large sums of money.

Tax Free Profits
All spread betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax (correct at time of writing for UK tax residents).

Limit your Risk
Spread Betting is a high-risk activity, but some firms such as Capital Spreads  offer an automated stop-loss facility which encourages you to understand and control your risk. Although you must be aware that stop losses are not guaranteed.

Your stop-loss is set according to the funds available on your account up to a maximum computer-generated level. You can amend your stop-loss to suit your needs. They also hold an additional 20% of your funds to allow for slippage or a market gap.

Risks
Although you can make substantial profits from spread betting, if the markets move against your bet, your loses can also be substantial and although spread betting firms have a policy of attempting to limit client losses on bets by applying an automatic stop–loss to each bet you make, these stops are not guaranteed. As a consequence, if a market gaps, you may lose more than your initial deposit.

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