Rewarding but very risky (Spread Betting With Shares)

Member Name: 1357

Product:	Spread Betting With Shares
Date:	12/11/01 (750 review reads)
Rating:

Advantages: Huge potential rewards, No charges, No tax

Disadvantages: Very risky

Spread betting is very simple and the high rewards that can go with it are proving very attractive to anyone interested in investment, particularly as you do not pay any dealing costs on your trades, or any taxes on your profits !

Spread betting gives the investor an opportunity to back their judgement on almost any financial market, over a given period of time. All the investor needs to decide, is whether to 'buy' or 'sell' the spread betting companys prediction of a future outcome. In all cases the prediction, known as the 'spread' is represented by 2 figures - Daily FTSE SELL BUY
6300 6306

Th first, or lower figure in the spread (6300) is the one at which you sell when wanting the market to go lower. The Higher figure (6306) is the one you buy when wanting the market to go higher. You then select the unit stake of your choice - whether it is the minimum 2 pounds per point, or the maximum 500 pounds (or anything in between). When the result of the trade is known, for every point by which you turn out to be right, you win a multiple of the stake you choose. Conversely, for every point that you turn out to be wrong, you lose a multiple of your stake.

For example - thinking that the FTSE will fall you 'sell' at 6300 for 5 pounds a point. YOu incorrectly predicted that the FTSE would fall below 6300 by market close. You lose the difference between the closing price (6350) and your opening level (6300) multiplied by your stake ( 5pounds). Thus, you lose 250 pounds.

Trading on individual shares (as opposed to the whole market) is also very popular. This works in the same way as the market spread betting detailed above (ie. depending on the quoted spread, you bet that the share will be lower/higher than the spread - say at 5 pounds a point. If you are correct, for each penny over/under the spread you win 5 pounds.

By its very nature, spread betting in volatile m
arkets can produce losses as well as profits. Prices can move rapidly against you and can often require you to make further payments to cover these changes in price. I suggest that you monitor the movements of the market in which you are dealing and so understand better the risks before you take a view.

Spread bets carry a high risk to your capital. Only speculate what you can afford to lose. Ensure that you are fully aware of the risks involved and seek profesional advice if neccessary.

The internet is full of spread betting companys - but try www.finspreads.com. I use them, and have had no problems.

Summary: