What Are the Benefits of Spread Betting?

June 5, 2017 at 8:14 AM Leave a comment

If you are new to the financial marketplace, the sheer wealth of available assets, markets and derivatives can be truly overwhelming

As a beginner, however, it is important that you select derivatives that offer both flexibility and liquidity in equal measure, while also identifying trading vehicles that can minimize risk over a sustained period of time.

When dealing in derivatives, one of the best methods that you can use is spread betting. In this article, we will look at some of the main advantages that this offers to investors in the current market:

     1. Gain Access to Complex and Volatile Markets

The foreign exchange remains one of the most lucrative and popular markets, but one that is also extremely volatile. This level of volatility can deter most novices from investing in currency, but spread betting actually makes the market more accessible and easy to navigate.

Not only this, but modern trading platforms also introduce additional risk management tools such as detailed stop losses, which automatically close positions once losses have reached a predetermined level. This augments the impact of spread betting, creating accessible markets that deliver a far more appealing risk to reward ratio.

      2. Spread Betting Negates the Burden of Ownership

On a similar note, spread betting also enables traders to deal in lucrative assets without assuming the burden of ownership.

This is because spread betting is a speculative investment vehicle that allows investors to profit even in a depreciating market, as they have the opportunity to back or hedge against the performance of an underlying asset. In the case of currency, for example, investors can profit by investing in the USD/GBP pairing and hedging against the pound.

This offers a considerable advantage to traders, who can monitor trends and achieve a profit regardless of the wider, macroeconomic climate.

     3. Achieve Higher Levels of Profit Through Spread Betting

When spread betting through contemporary, online trading platforms, you will not be charged any commission or brokerage fees when opening (and closing) trades. In fact, most generate profits from the minimal spreads that are applied, so traders can utilize their capital solely for the purpose of executing orders.

There is also no fee charged for holding an account, so you can maintain a zero balance when necessary without incurring charges.

When aligned to the other advantages of spread betting that have been discussed here, this is clearly a practice that can drive more cost-effective and ultimately profitable trades in the digital age.

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