Financial Spread Betting on the Rise

Credit: Tax Credits

Credit: Tax Credits

Entrepreneurs understand the value of insight more than most. As a breed they’re also hard-wired to target a cash return on everything they do. That’s why more and more financially savvy, entrepreneurially-minded people are taking up the growing trend of financial spread betting.

Financial spread betting (FSB) offers a direct means to exploit business insight by betting against the moves in the world’s stock markets. Using either a conventional desktop or a smartphone app individuals are able to trade in stocks, currencies (i.e. forex), bonds, commodities and even the movement of composite indices like the FTSE or the Dow Jones index. The world is your trading oyster.

FSB’s growing popularity is easily explained: It offers the potential for immediate and substantial returns. It has to be said, it is not a risk-free way to trade – there is also the possibility to run up significant losses. But that risk-reward equation is meat and drink to the entrepreneurially minded at whom this product is targeted.

Not only does FSB entail the means to win big, it is also free of the charges that ordinarily attach to dealing in stocks and shares. With no stamp duty, no dealing or brokerage fees and no capital gains tax liability on any winnings FSB is increasingly the medium of choice for individuals keen to cash in on market insight.

FSB is a derivative-based concept which means that no stocks are actually traded – hence the lack of any tax hit. Rather, what is traded equate to ‘contracts for difference’ whereby a trader takes a position on a market and either wins if the market moves in his favour, or starts to build up losses if it moves against him (90% of spread betters are men).

The spread bet aspect of the concept means that an initial stake is set against the degree of movement of the market. If the market moves ten points in the player’s favour they win ten times their stake, a twenty point swing brings a twenty-fold return, and so on. The potential for profits in a volatile market are obvious. The downside is that losses are calculated on the same basis. Players must recognise that FSB entails an open-ended exposure.

Currently, providers are falling over themselves to attract new users. That means that over and above the attractions of FSB itself there are some juicy sign-up offers on offer. For example, signing up for spread betting with Tradefair  currently comes with a 10% account bonus up to a value of £1,000.

There are those who make a full-time living in FSB. Others treat it more as a recreation. The smartphone apps offered by the main providers enable trading 24/7 but they are by no means as sophisticated as the more comprehensive desktops that are designed to replicate the information-packed screens of professional traders. In an environment where information translates into cash, access to that sort of detailed intelligence is fundamental.

In essence, FSB is what you make it. Undeniably it is more involved than a fixed-odds bet, but for those who take their money seriously that is part of the attraction. There is a growing literature of books, articles and websites offering advice, insight, tips and tricks aimed at precisely those who are intrigued by what is still a relatively unknown betting forum.

FSB’s open-ended risk/reward equation does require players to enter the market with some insight and some self-discipline. But for anyone with strong nerves and the right mindset, it offers a stimulating and potentially lucrative experience.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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