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:

Q.	What is Spread Betting?
Q.	Why is it called Spread Betting?
Q.	What is a spread?
Q.	How much does it normally cost to make a trade?
Q.	How much capital do I need to start trading?
Q.	What markets are available?
Q.	What types of bets are available?
Q.	How does an index bet work?
Q.	Show me a share example...
Q.	How about a forex example?
Q.	Can you use a spreadbet to trade commodities?
Q.	How does it differ to conventional betting?
Q.	What is a derivative product?
Q.	Tell me a little about the history of spread betting?
Q.	How long has it been around?
Q.	Is Spread Betting really tax-free?
Q.	But then how is one taxed if one invests in spread bets/CFDs?
Q.	Why does the UK do this - isn't the country losing revenue due to no taxes being levied on spread betting gains?
Q.	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?
Q.	How much is stamp duty and when is it paid?
Q.	What is the reason for Stamp Duty? I'm already taxed on my income and gains...
Q.	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?
Q.	Financial spread betting and self-employed? Would I have to pay income tax? Would I need to fill a self-assessment form?
Q.	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...
Q.	If I let a friend do my spread betting am I liable to pay CGT or Income Tax on profits?
Q.	Does the tax exemption still apply for spread betting done via a company?
Q.	Can a club spread bet tax free or do we have to use CFDs?
Q.	Can income tax be claimed on losses in spreadbetting?
Q.	Is Spread Betting a qualifying investment for a Sipp?
Q.	Is Spread Betting Gambling?
Q.	Why does the FSA put spread trading under the category of gambling?
Q.	What are the Risks?
Q.	Is Spread Betting for you?
Q.	But does a typical user tend to have City experience?
Q.	What sort of people do you think should consider spread trading, and what sort of people shouldn't?
Q.	Can you help a complete novice find the way to begin a new spread betting career...?
Q.	Is Spread Betting OK for a Complete Novice?
Q.	What are the Pros and Cons of using spread betting to trade?
Q.	What is the catch?
Q.	Can you trade a sb account from other EU countries (as non UK resident)?
Q.	Why is it illegal in the USA?
Q.	A thing I've been seeing in reading reviews of spread betting brokers is the word bucket shops...
Q.	But aren't they just bucket shops - after all the spread betting trades aren't cleared on a recognised exchange, are they?
Q.	Why trade with a Market Maker? Why not go through the Direct Market Access route instead?
Q.	How long does your bet last?
Q.	Why do spread bets have an expiry date?
Q.	Can you use spread bets for holding out longer term positions?
Q.	What is the difference between normal trading and spread betting?
Q.	How does spread betting compare to shares trading?
Q.	What is Leverage?
Q.	But isn't it more risky than shares trading?
Q.	Why use gearing? What's wrong with getting rich slowly?
Q.	Sometimes it appears to be more efficient to spread bet and sometimes more efficient to purchase a share (or other instrument)?
Q.	What do the terms 'Short Position' and 'Long Position' mean?
Q.	Can you really make money in falling markets with a spreadbet?
Q.	But how can you sell something you don't own?
Q.	What is a Point/Pip/Tick?
Q.	Does a fraction of a pence count as a point move in SB or does only a full 1p move only count?
Q.	What is the difference between an 'intraday' and 'overnight position'?
Q.	What is Margin?
Q.	I still can't understand what is Margin...
Q.	What is Variation Margin?
Q.	Can you briefly tell me what IMR and CGSL stand for?
Q.	Standard margins for FTSE and Dow are 2% of notional (NTR). What does that mean?
Q.	How do margin requirements work at IG Index? They appear to vary...
Q.	I don't have the finances to do it for real...is there a simulator account I can use?
Q.	The minimum bet/risk per trade for the market I want to bet on is too steep...
Q.	I only have £10,000 in savings and I don't want to risk it all...
Q.	How can I work out my exposure on a position?
Q.	But isn't it more complicated than shares dealing?
Q.	Can I close my position at anytime?
Q.	Is demo trading identical to trading for real?
Q.	Should I use a simulator account or go live?
Q.	I'm really nervous about playing with real money...
Q.	How much is a reasonable amount to start out with (£50, £100)?
Q.	Can I actually trade on credit and not deposit anything!?
Q.	What is a Stop Loss Order?
Q.	How much should I risk?
Q.	How do I determine my risk level?
Q.	How does leverage affect my trading?
Q.	What is Shorting?
Q.	But isn't shorting too risky?
Q.	How can I profit from Short Selling?
Q.	But isn't shorting complicated?
Q.	But isn't rooting for stocks to decline in price unpatriotic?
Q.	Any ideas on how best to short, for somebody like me who's never done it before (apart from spread betting)?
Q.	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?
Q.	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?
Q.	What about companies which are already heavily shorted?
Q.	Do you have any comments on what is happening with Next. It is a 'short' that is going up!
Q.	If you short a share via a spreadbet eg MKS (Marks & Spencer) does it make any difference to the share price of MKS?
Q.	If you short an index eg share index or commodity, does it make any difference to the underlying instrument?
Q.	I was trying to short 3 US stocks earlier and I could only short one!?
Q.	Can you always use guaranteed stop losses with a short?
Q.	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?
Q.	Can't place a sell order due to underlying restrictions - what's that about?
Q.	Won't the shorting ban hurt spread betting companies?
Q.	Is spread betting subject to disclosure rules?
Q.	I've always thought that spread betting was a fool's game - much too risky compared to shares dealing...
Q.	It unnerves me to think that I am working against a betting company...
Q.	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...
Q.	Spread-betting is unpatriotic, harmful to all quoted businesses and works against the interests of UK financial institutions...
Q.	Is it possible to open and close bets on FTSE/Dow indices on a daily basis and be profitable?
Q.	But aren't the odds stacked against you?
Q.	Show me some intelligent ways of using a spread bet...
Q.	Where's a good place to look at the futures?
Q.	Do I profit for each point that the FTSE moves or every full % point?
Q.	The FTSE futures do not expire everyday right?
Q.	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

Hope that answers some of your questions but feel free to send me queries, comments or concerns at traderATfinancial-spread-betting.com

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