Financial Spread Betting or also known as Financial Spread Trading is sometimes thought of as a short-term business, in which bets are placed for a few days or even hours in search of quick profits. It is certainly possible to do well out of short-term spread betting but you shouldn’t overlook the possibilities of betting over the long term too, as there can be significant advantages over traditional share trading in terms of convenience and cost.
Spread betting involves less difficulty than share trading and it can work out More cost effective, because of the costs involved in buying and selling shares through a broker. You pay commission when you buy and sell shares (this might be £10 each time on a small trade, more for larger ones) and stamp duty of 0.5pc when you buy. These dealing costs can make a big dent in profits and increase your break-even point.
With financial spread betting, the cost of a quarterly bet is included in the spread and there is generally no tax to pay* (though you should check your tax situation). Because financial spread betting is leveraged – you are not buying the underlying shares – capital outlay is much lower than in traditional share trading. Think of it like a mortgage on your house, you get to buy an asset with just a percentage upfront.