What is Spread Betting?

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For those that haven’t heard about spread betting, at ForexSQ we think it’s important that you know about this technique. Spread betting is a method of wagering on the consequence of a particular event, where the pay-off is based on the accuracy of the wager, and it is different from a simple fixed-odds betting because the payout is not predefined. Generally, the main purpose of spread betting is to produce an active market for both sides of a binary wager, even if the result of an event could appear to be biased towards one side or the other.

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Spread betting is mainly accepted in the UK, where every single event, comprising sports matches or how many seats a political party will gain in a general election, or even in things such as the consequence of the Brexit referendum, is open to wager. However, at the same time, is illegal in countries such as the Australia, Japan and US to mention some major economies that forbid this kind of trading.

While talking about financial spread betting, we are talking about speculating over the movement of a particular asset – commodities, currency pair, indexes, stocks, etc – without actually having the asset. The degree of confidence determines the size of the loss, or the profit. While it comes to Forex, you are pretty much speculating on the direction in which the value of a currency pair will move. If it does, your profit will increase in relation to the advance of the pair. If it goes in the reverse direction, the greater will be your losses.

The good news is that spread betting allows you to use stop losses. You have to wager a little extra, like an insurance, to limit the amount of money you can lose if the asset goes in contrast to your belief.  It differs in size, but generally is around a 10 percent of your bet. While it comes to volatile assets, some brokers permit paying a bit more for a guaranteed-stop.

ForexSQ has quite a good analysis on different brokerage firms that permit spread betting, with details of the top spread betting companies that comprise details on spreads, platforms and minimum risks.

As at all times when trading, there’s the risk that, despite you having analyzed all and each single variable that can touch the price move of any asset, things can go wrong. Just think of the SNB lifting the peg between the EUR and the CHF and the outcomes it had all over the financial world. Don’t wager money you can’t afford to lose.

Admit that things can go wrong, and that you can acquire it wrongly: believe it or not, 99.9 percent of the time you are the one to blame, and not the price makers, the market, or your broker. Step back, accurately study what is the main reason behind the fail, and start over. Determination is the key to success.

To review and compare spread betting companies visit www.ForexSQ.com.

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