In Most Instances It's Just Pure Gambling (Spread Betting With Shares)

Member Name: eyedo6789

Product:	Spread Betting With Shares
Date:	06/03/09 (114 review reads)
Rating:

Advantages: You Could Win A Lot

Disadvantages: You Could Lose Your Shirt

Spread Betting on shares is essentially like gambling. Instead of gambling whether a horse or dog will win a race you are gambling on whether a share price will go up or down.

There are several companies that offer spread betting on shares, most of which is now done on line. Amongst them are (in no particular order, and there are many others as well), City Index, CMC Markets, GNI Touch, IG Index , Spreadex and Finspreads.

When you spread bet on a share price you are given a two way quote that offers you a buy and a sell price. You then choose whether you want to buy or sell. If you buy you want the price to go up and if you sell you want the price to go down. It's as simple as that really.

You also specify a quantity (or size) of your bet which will be expressed in pounds per point (pounds per 1p of movement in the share price). The amount you are prepared to bet per point will depend on your means, how confident you are about your view on the future price movement and how much risk you are prepared to take.

The main advantages of spread betting on shares are:
You only pay margin on your bet, not the full value of the share price.
You can do a sell bet on many, but not all shares, if your view is that the share price may fall.
You can leave automated stop loss, stop win and trailing stop loss/win bets to be transacted.
You can use spread betting as a hedging tool against existing traditional share/unit trust/equity holdings
You do not have to make share dividend payments on sell bets.
There is no capital gains tax to pay.

The main disadvantages of Spread Betting on shares are.
You can only close your bet with the spread betting company that you opened it with.
Spread Betting contracts are time limited so you will incur rollover fees if you wish to run your bet past the expiry date of the contract.
You do not receive share dividend payments on buy bets.

In summary spread betting on shares is exactly like gambling in most instances unless you are using it as a hedging tool or on a purely professional basis.

Of course only ever speculate with money that you can afford to lose.

Summary: A Useful Tool If You Know What You Are Doing And Are Careful