Spread betting offers traders – new and experienced – the opportunity to trade on the future price movements of a wide range of financial markets, including shares and indices, for only a small initial deposit.

Go Long or Short

Spread betting offers increased trading flexibility as you can trade and potentially profit from all price movements, up as well as down.

If you believe that the price of a market will rise in value, you go long or buy. Your profits will rise in line with any increase in that price.

If, however, you believe the price of a market will fall, you can go short or sell, and your profits will rise in line with any fall in that price.

Alternatively, if you are wrong and the price of a market moves against your position, you will encounter a loss.

Margin Trading (Leverage)

Unlike more traditional forms of trading, the margin feature — also known as ‘leverage’ — in spread betting means that you only deposit a small percentage of the full value of the underlying instrument in order to place your trade.

In turn, this makes trading the financial markets more accessible as you are not required to deposit large amounts to take a position.

Margin can also magnify potential profits — you can make a high percentage return on your initial deposit with a relatively small movement in the underlying market.

Tip: Remember that margin is a double-edged sword. Whilst it can magnify gains when the market moves in your favour, it can also magnify losses – meaning you can lose more than your deposit. Risk Management tools such as stop loss orders can help you to limit your risk.

As mentioned above, spread betting sees traders take a position on the future price movement of a financial market.

As a derivatives product, market prices are ‘derived’ from an underlying market through the spread betting platform. Each spread bet position, for example, a buy spread bet on Vodafone shares, means that you are simply speculating on the movement of Vodafone’s share price in the future, and you do not physically own the underlying share.

Tax-Free Gains*

In the UK, all profits gained through spread betting the financial markets are currently exempt from both Stamp Duty and Capital Gains Tax*.

Find out More About Spread Betting

Find out more in our What is Spread Betting section or learn about how you could benefit from spread betting the global financial markets through our Benefits of Spread Betting section.