Although UK tax laws may change in the future, the great news is that spread betting is totally tax free making it a very cost-effective alternative to traditional share trading. Spread betting allows you to speculate on the movement of stocks and shares without using a stockbroker, therefore you don't have to pay commission or fees. We make a spread around the live, underlying market price and you can bet on whether this market will rise or fall.
Trading on the movement of stocks and shares provides the opportunity to generate substantial profits on both rising and falling markets. So you get all the advantages of speculating on the stock markets and much more.
Now, we need to get the not-so-good news over with. It's important to remember that substantial rewards can also mean substantial risks. With spread betting, it's conceivable that you could actually lose more than your initial deposit or stake. Trades can and will turn against you sometimes so it's important to speculate only with money that you can comfortably afford to lose. And it's OK to lose trades; in fact, professional traders expect to lose trades about half the time. What makes the difference is that they hope and expect their wins to exceed their losses in monetary terms. Please make sure you're aware of the risks and, if you're in any doubt, consult a qualified financial advisor.
The 'spread' in the phrase spread betting refers to the difference between the Sell (Bid) and Buy (Offer) price quoted by the spread betting company. This price is calculated around the live (or the estimated future) market price of a financial product such as a financial index like the FTSE, a commodity like Gold or the share price of a company such as BP plc, for example.
When you spread bet, you don't buy the stock or the share. You don't own anything. But instead you simply bet on which way you think the market or the share price will move, either up or down. It's not rocket science. With Tradefair Spreads, the minimum bet (or stake) is currently £1 per point.
Time for a quick couple of sums to illustrate the point.
You need to be aware that your losses can increase dramatically if the markets move against you rapidly. At Tradefair, we want you to enjoy your spread betting and profit from it. So again, please be aware of the risks as well as the potential for profit.
The Tradefair Spreads platform has been designed to make it as easy as possible to trade. What's more, spread betting can be a remarkably cost-effective way to trade the markets. Some of the reasons for this are:
Although, just on that last point, we're obliged to make it clear that UK tax laws may change in the future and outside the UK, tax law may be different.