What is Financial Spread Betting? In a Nut Shell!
In the world of global investing, stock trading, commodities, futures, and all those other hard to explain financial terms, there is a new bull in the stock yard…or is it bear in the den?
Generally speaking, spread betting is betting on the outcome of a specific event. The bet pay off is based on a person’s accuracy rather than a static win or lose.
For instance, someone can place a spread bet on a horse race that the winning horse will win by 2 meters over the placing horse.
Financial spread betting is basically betting on whether a stock will go up, go down, or stay the same. The bettor must speculate, and based on his accuracy, he can win or lose a certain amount of money.Financial spread betting is basically betting on whether a stock will go up, go down, or stay the same. The bettor must speculate, and based on his accuracy, he can win or lose a certain amount of money. Spread betting is very popular in the UK especially with people who are interested in the way money and betting works, and also like to visit sites like Love Money, but isn’t practiced in the United States.
When planning to place a spread bet, you would meet or use an online stock broker. The stock broker will quote you two different prices. The lowest price, the price you would pay to sell shares, is the bid price. The highest price, the price you would pay to buy shares, is the offer price. The grey area in between is called the spread, hence the spread bet.
If you think the price will go up, you buy at the offer price, but if you think the price will only go down, you buy at the bid price. You would then place a bet of a certain amount of pounds per point or per penny.
There is a lot that goes into financial spread betting, and if you're a beginner, read more of our spread betting tips and guides to get a grip on the system before diving in head first!
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Risk Notice: Spread betting carries a high level of risk to your capital and you may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.