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A spread bet is a bet on the future movement of an underlying instrument. Spread betting is unique in the sense that you are predicting the movement of an instrument and you never actually own it. Spread betting offers a tax free way to make money, which is appealing to many investors.(Keeping in mind tax laws can always change or may differ depending on your personal circumstances).
An example of spread betting - commodities
Gold is a commodity, and it is a particularly popular commodity to spread bet. Why spread bet on gold? Gold is a precious metal with incredible worth and it has been used as a form of currency and an investment for thousands of years. Gold is different in the sense is it is indestructible and incredibly valuable. Spread betting on gold is an exciting prospect, as you’re able to predict its movement without actually having to own it.
Gold is not the only metal which you can spread bet, there is also silver, copper, aluminium, uranium, platinum or palladium. Commodities are classed as volatile as they have factors affecting their production. For example with aluminium a lot of energy is needed to produce aluminium so prices for it tend to be stressed by the cost of energy. Silver isn’t as popular as gold but it is used in many ways, for example it is used in electronics such as mobile phones and in the pharmaceutical market where it is a natural anti-bacterial metal.
What are the risks of spread betting?
Like with any form of gambling or betting, there are risks involved. This is why an effective risk management strategy is crucial. The reason why an effective risk management strategy is necessary is because it is possible to lose more than your initial deposit. It is not something that is suited to everyone so it is wise to fully understand the risks involved.
Seminars
What’s the best thing to do before starting to spread bet? Involve yourself in either an online spread betting seminar, or even an office one. This is one of the best ways to learn spread betting. The beauty of online seminars are they teach you the basics of spread betting so you have an understanding before using real money. Whether you’re a newbie to spread betting or an expert alike, you’re certain to learn a trick or two from the online or office seminars.
Demo Account
What’s the next best thing to do after you’re taken an online or office seminar? Open a practise demo account. The benefit of practising on a demo account is you’re able to put into practise the tips and tricks that you learnt during the seminars and put them into practise in a demo account. The demo account is designed to mirror the live account, giving you the perfect opportunity to practise with fake money and not real money. You may also find it worthwhile to learn the difference between spread betting and CFD Trading. The more knowledge you have the more confident you’ll be at spread betting or CFD trading.
