Your Questions to Financial-Spread-Betting.com


These days, I'm regularly receiving questions regarding spread betting from some of you. Since I thought some of them might be of interest to our visitors I'm publishing the answers which I've researched here:


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What is Spread Betting?
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Why is it called Spread Betting?
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What is a spread?
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How much does it normally cost to make a trade?
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How much capital do I need to start trading?
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What markets are available?
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What types of bets are available?
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How does an index bet work?
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Show me a share example...
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How about a forex example?
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Can you use a spreadbet to trade commodities?
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So you could even bet on a sector?
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How does it differ to conventional betting?
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What is a derivative product?
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Tell me a little about the history of spread betting?
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How long has it been around?
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Is Spread Betting really tax-free?
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But then how is one taxed if one invests in spread bets/CFDs?
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Why does the UK do this - isn't the country losing revenue due to no taxes being levied on spread betting gains?
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You mention that spread betting on the financial markets is not subject to capital gains tax in the UK. But what is the situation in Ireland?
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How much is stamp duty and when is it paid?
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What is the reason for Stamp Duty? I'm already taxed on my income and gains...
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I'm looking to trade US equities, thinking of getting an account in the US (thinkorswim), what are the tax reporting requirements on this stuff?
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Financial spread betting and self-employed? Would I have to pay income tax? Would I need to fill a self-assessment form?
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I currently work part-time and spread bet stocks - I understand that there is no income tax on spread betting; but what is the situation with payment of National Insurance?
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I know that spreadbetting is free of capital gains tax in the UK, but I have heard people say that if it is your main source of income then you might have to pay tax...
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If I let a friend do my spread betting am I liable to pay CGT or Income Tax on profits?
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Does the tax exemption still apply for spread betting done via a company?
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Can a club spread bet tax free or do we have to use CFDs?
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Can income tax be claimed on losses in spreadbetting?
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Is Spread Betting a qualifying investment for a Sipp?
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Is Spread Betting Gambling?
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Why does the FCA put spread trading under the category of gambling?
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What are the Risks?
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Making money: Is spread betting for you?
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Is Spread Betting for Me?
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But what types of clients choose to spread bet?
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But does a typical user tend to have City experience?
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What sort of people do you think should consider spread trading, and what sort of people shouldn't?
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Can you help a complete novice find the way to begin a new spread betting career...?
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Ok, say I have £10,000 of risk capital I want to start trading with?
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Is Spread Betting OK for a Complete Novice?
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What are the Pros and Cons of using spread betting to trade?
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What are the secrets of spread betting?
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What is the catch?
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Can you trade a sb account from other EU countries (as non UK resident)?
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Why is it illegal in the USA?
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A thing I've been seeing in reading reviews of spread betting brokers is the word bucket shops...
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But aren't they just bucket shops - after all the spread betting trades aren't cleared on a recognised exchange, are they?
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But aren't the prices manipulated?
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Why trade with a Market Maker? Why not go through the Direct Market Access route instead?
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How long does your bet last?
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Why do spread bets have an expiry date?
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What is the difference between an 'intraday' and 'overnight position'?
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Can you use spread bets for holding out longer term positions?
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Is there a maximum position size? I wish to bet using large stakes...
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What is the difference between normal trading and spread betting?
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With spread betting, say you bet on a market to go up - and it goes down 10 points or something, do you incur extra costs or is it like regular shares?
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How does spread betting compare to shares trading?
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What is Leverage?
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What is the difference between leverage and margin?
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But isn't utilising leverage to trade more risky than shares trading?
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Why use gearing? What's wrong with getting rich slowly?
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Sometimes it appears to be more efficient to spread bet and sometimes more efficient to purchase a share (or other instrument)?
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What do the terms 'Short Position' and 'Long Position' mean?
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Can you really make money in falling markets with a spreadbet?
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But how can you sell something you don't own?
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What is a Point/Pip/Tick?
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What are pips and points?
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Does a fraction of a pence count as a point move in SB or does only a full 1p move only count?
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What difference does the buy/sell price make if you're betting say £1 for unit? What are the odds?
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What is Margin?
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I still can't understand what is Margin...
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What is Variation Margin?
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Can you briefly tell me what IMR stands for?
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Standard margins for FTSE and Dow are 2% of notional (NTR). What does that mean?
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How do margin requirements work at IG Index? They appear to vary...
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I don't have the finances to do it for real...is there a simulator account I can use?
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How much is a reasonable amount to start out with (£50, £100)?
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Is it okay to spreadbet with £2k?
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The minimum bet/risk per trade for the market I want to bet on is too steep...
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I want to reduce my exposure by staking a very low amount per point - say starting £1 per point...
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I only have £10,000 in savings and I don't want to risk it all...
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How can I work out my exposure on a position?
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But isn't it more complicated than shares dealing?
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Can I close my position at anytime?
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Is demo trading identical to trading for real?
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So why virtual trading?
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Should I use a simulator account or go live?
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I'm really nervous about playing with real money...
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What is the difference between a deposit account and a credit account?
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Can I actually trade on credit and not deposit anything!?
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Do spreadbetting firms actually update your credit file with your account history?
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What is a Stop Loss Order?
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How does leverage affect my trading?
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How much should I risk?
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Can you explain how you go about figuring out what amount of shares you should buy, or amount you should spend on a holding to be in keeping with the 2% rule?
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How do I determine my risk level?
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What is Shorting?
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But isn't shorting too risky?
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How can I profit from Short Selling?
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But isn't shorting complicated?
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But isn't rooting for stocks to decline in price unpatriotic?
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Any ideas on how best to short, for somebody like me who's never done it before (apart from spread betting)?
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If I buy the shares, the worst that could happen is that I lose all my money, whereas if I short them by spread-betting for instance, the potential losses are unlimited?
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If I'm already short on FTSE daily at £2pp and I'm suddenly hyper confident that its going further down can I open another short on FTSE daily at £10pp?
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What about companies which are already heavily shorted?
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Do you have any comments on what is happening with Next. It is a 'short' that is going up!
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If you short a share via a spreadbet eg MKS (Marks & Spencer) does it make any difference to the share price of MKS?
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If you short an index eg share index or commodity, does it make any difference to the underlying instrument?
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I was trying to short 3 US stocks earlier and I could only short one!?
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Can you always use guaranteed stop losses with a short?
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Yes, but suppose there are rumours of a takeover and I wanted to place a short with a guaranteed stop will the spread betting company still allow me to go short in that company using a GSL?
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Can't place a sell order due to underlying restrictions - what's that about?
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Won't the shorting ban hurt spread betting companies?
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Is spread betting subject to disclosure rules?
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For normal stock trading how does it work regarding the declaration of a major interest in a quoted company?
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But isn't this a bit like backing a horse, in that the odds are skewed so that the broker always wins?
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I've always thought that spread betting was a fool's game - much too risky compared to shares dealing...
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It is too full of potential extremes which are simply not within your control at all...
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It unnerves me to think that I am working against a betting company...
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Regarding using spread betting I was under the impression that it was a bit of a risky game in terms of being able to lose more than you put in...
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Spread-betting is unpatriotic, harmful to all quoted businesses and works against the interests of UK financial institutions...
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Is it possible to open and close bets on FTSE/Dow indices on a daily basis and be profitable?
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Why is it so important to have tight spreads?
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But aren't the odds stacked against you?
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Show me some intelligent ways of using a spread bet...
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Where's a good place to look at the futures?
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Do I profit for each point that the FTSE moves or every full % point?
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The FTSE futures do not expire everyday right?
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How can an index continue to fall or rise if the market is closed? I want to bet on real events/news!

 ...Continues here - Margin and Financing Questions Answered Here

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