Spread Betting Questions and Answers

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:

Basic Q & A : Spreads Q & A : Advanced FAQs : Spreads Q & A : More FAQs : Stop Loss FAQs : Expert FAQs

There are two ways to browse through the questions - either use the Index lists above or browse through the FAQ sections below. We will be adding more questions in the next few months.

What it Is
What is Spread Betting?
Why is it called Spread Betting?
Some Spread Trading Examples
Derivatives and the Origin of Spreadbets
Is it Really Tax-Free?
Is Spread Betting Gambling?
Is Spread Betting for you?
Is this OK for a Complete Novice?

Pros and Cons
Pros and Cons of Spread Betting
Trading from the EU or USA
But aren't they just Bucket Shops?

The Basics
Why do Spread Bets have an Expiry Date?
Spreadbets versus Share Dealing
Gearing: Bigger Gains : Bigger Losses
Going Long and Going Short
Initial and Variation Margins
Calculating Exposure and Closing Positions
Is Demo Trading identical to Trading for Real?
Stop Loss Orders, Amount to Risk and Risk Levels

Short Selling Introduction and Odds of Winning
Introduction to Shorting and Making Money Spread Betting
Shorting and Short Selling Questions
Isn't Spread Betting Risky and Unpatriotic!?
Odds of Winning and Successful Spread Betters
Intelligent Ways of using a Spread Bet

FTSE Futures, Financing and Margin Requirements
FTSE Futures and Market Trading Times
Questions about Margin Requirements

How do Financial Spread Betting Companies Make Money?
How Spread Betting Companies Make their Money
Financing Charges in Spread Betting

Betting on Stocks, Rollovers and Margin Calls
Questions about Margin Calls
Betting on UK and US Stocks
Questions about Rollovers, Quarterlies and More

Stop Orders, Realistic Expectations and the Dangers of Overgearing
Market, Limit & Trailing Orders, OCO, Parent & Contingent Orders
Can I start with a Meagre 75 Pounds and make 50 Pounds per Day?
Buying Stocks vs Spread Betting vs Spread Trading vs Fixed Odds Betting
Market Gaps and Slippage
But when should I Sell?
Averaging Down and Pyramiding Up
Leverage and the Dangers of Overgearing

Currency and Gold Spread Bets
Currency Spread Betting and the Carry Trade
How to Get Exposure on the Yen
Spread Betting on Gold

Advanced Strategies and Mechanics
Strategies - Pairs Trading
Rolling Dailies or Longer Term Futures?
FTSE 100 Tracker & how Dividends are accounted in Index Bets
Spreadbet Charges and Funding Costs
Technical Market Indicators and their Workings

Penny Stocks
Spread Betting on AIM Stocks and Small Caps
Why do Penny Stocks and USA Shares have Wider Spreads?

How Consolidations, Dividends, Rights Issues, Stock Splits and Suspensions are Accounted for
How Dividends are Accounted for in Spread Betting
Stock Splits and Consolidations
Rights Issues and Stock Suspensions

FTSE/Dow Future Spread Bets, Trading After-Hours and Cost of Carry
How the FTSE/Dow Future Spread Bets are Priced and Trading Out-of-Hours
Systems Testing, Fair Value, Cost of Carry and More

Comparing CFDs and Direct Market Access/Spread Bets/Covered Warrants/Options
Spread Betting versus CFDs
Spread Betting versus Direct Market Access (DMA)
Using Options as a Hedging Tool
Spread Bets Compared to Covered Warrants/Turbos

Do Providers Close Winning Accounts / Are Prices Skewed?
Do Spread Betting Providers Close Winning Accounts?
What about Binary Betting Companies Closing Accounts?
Are Spread Prices ever Skewed?

Complaints, Segregation of Funds and Provider CounterParty Risk
Do Spread Betting firms Hedge their Customers' Bets?
Segregation and Ringfencing of Client Funds
Complaints and Enforcement of Debts
Spread Betting White-Label Clones
MiFID Regulations: Implications for Spread Betting and CFDs
Working for a Financial Spread Betting Company

General Stock Market Workings Questions
Analysts Jargon, Underweight, Neutral and Overweight
Preference Shares and Share Splits
Yield, Ex-Dividend and Record Date
Promotion and Relegation of FTSE Stocks
Buybacks, Debt, Placings and Profit Warnings
Housebuilders Priced below Book Value and REITS
Why are Shared Ownership Schemes usually a Bad Idea?
Risk Grades, Price Monitoring Extensions and Capitulation

Selecting Stocks and Investment Research
Selecting Stocks & Guesstimating Future Share Prices
Sources for Investment Research and Information
Tipsters and Publications

Bonds, Gilts and LIBOR
Bonds and Index Linked Gilts
LIBOR and the Bank of England
Betting on Interest Rates

Exchange Traded Funds and Penny Stocks
Exchange Traded Funds and Stamp Duty
Penny Stocks and Market Makers

Strategies and Money Management
When to go long: Adding to Winning positions and cutting from Losing Positions
Money Management is KEY in this Business
Using Charting Tools to Predict Future Price Movements

Scalpers and Arbitrage Traders
Scalping, Day Traders and Spreadbetting
Why do Spread Betting Bookies hate Arbitrage Traders?

Level 2 and how Interest Rates affect Stock Prices
Level 2 and its Workings
Stock Market Workings and Market Makers
How Interest Rates affect the Prices of Stocks

Educators and Advisory Brokers
Spread Betting Educators and Free Trading Seminars
What is your take on Advisory Brokers?

Using Spread Betting as a Hedging Tool
Using Spread Bets to hold out Longer Term Positions
Using Spread Betting for Hedging Purposes
Hedging the Sterling against the Dollar or Euro
Hedging Against Market Crashes

Telephone/iPhone/Blackberry/MAC Dealing
Telephone Trading
iPhone/Blackberry/MAC Trading

Expatriates and United States Residents
Expatriates and United States Residents
Spread Bets in SIPPs / Why do Big Banks Ban Employees from Spread Betting?

Protecting Profits and Limiting Losses
Stop Orders and and Where to Place Stop Loss Orders
What's Best: Using a Guaranteed Stop Loss or Ordinary
Trailing Stops and How to Use Them
The Limitations of Stop Losses
Do Providers Spike Out Stops?
Phased Exits and Managing Losses
Impulse Buying and Panic Selling
Emotions and Overtrading

Leveraged ETFs, Oil stocks and Housebuilders
Oil stocks, Contango and Backwardation
Why you should be wary of investing in a Leveraged ETF
Wine as an Investment

Making and Living Spread Betting and Preventing Addition
CMC Stop Spikes and Why Most Traders Lose Money
Making a Living from Spread Betting & More
Addiction and why so many Index Traders end up Losers

Successful Traders
Attributes for Financial Spread Betting Success
Money Management and Risk of Ruin
Bad Shopping Habits - to Spend or to Invest?
Long Term and Passive Investing
Having a Trading Plan is Fundamental in this Business
Luck and Dollar Cost Averaging as an Investment Strategy
Does Compounding Really Work?
Sell in May, Buy Back in November. Fact or Fallacy?
Becoming a Millionaire Spread Betting?
Why do so many Traders Lose Money?

First let's not kid ourselves - I'm going to put in an early health warning to say that spread betting is not for everyone - you can make very large gains but equally big losses. Using gearing increases the risk, no doubt about that but as long as you know what you're doing and understand the risk you will be all right. Strangely, I find the bigger your portfolio gets, the more risk-averse you become.

Before starting remember spread betting and day trading in general is risky: in other words if you can't afford to lose it, you can't afford to risk it!

Have a spread betting question or don't understand a stock market concept? - this is the section to ask! Before you submit a question please browse or search our list of answers to previous questions. Your question may already have been answered. If you do not find an answer, submit your question by e-mailing traderATfinancial-spread-betting.com

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