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About Financial Spread Betting

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About Spread Betting



The Basics

In a nutshell, Spread Betting is a tax–free1, commission free alternative
to trading shares and financial markets. This means that you don’t pay
Capital Gains Tax or Stamp Duty, and you don’t pay a stock broker’s
commission or account fees.

One of the major differences between trading the stock market and
Spread Betting is that with Spread Betting, you don't actually own the
share, you just bet on the performance of the share price.

Spread Betting is not limited to just shares, but also includes a wide variety of financial products such as

» Indices»Stocks» Bonds
» Currencies» Commodities» Interest Rates

If you think the financial product is going to go up, you buy a bet (in spread betting we call this going long). However if you think it is going to go down, you sell the bet (we call this going short or shorting). How much you win or lose then depends on how much the price goes up or down.

A spread bet price always has two parts. The first is the BID or the price you can sell at. The second is the ASK or the price you can buy at.
The Ryanair price is €6.00 – €6.06.
This means you will gain €5 for every cent the price moves up and lose €5 for every cent the price moves down.
You think the Ryanair price will rise and buy at €6.06 for €5 per cent
If the price rises to €7.06 – €7.12
If the price falls to €5.06 – €5.12
You sell at €7.06
You sell at €5.06
Your profit is
(7.06 – 6.06) x 100 x €5 = €500
Your loss is
(6.06 – 5.06) x 100 x €5 = €500
Betting on the FTSE 100 index allows you to speculate on a stock market without needing to choose individual shares.
The FTSE 100 index bet is priced at
6500 – 6502.
This means you gain €4 for every point the price moves down and lose €4 for every point the price moves up.
You think the index will fall, so you sell at 6500 for €4 per point
If the price falls to 6398 – 6400
If the price rises to 6598 – 6600
You buy at 6400
You buy at 6600
Your profit is
(6500 – 6400) x €4 = €400
Your loss is
(6600 – 6500) x €4 = €400
A great way to trade oil is to spread bet on the price of Brent Crude
Brent Crude is priced at
$90.00 – $90.04.
The Brent Crude price is in US Dollars but with spread betting there is no need to worry about that. Your winnings and losses are paid for in the same currency as your account.
You think the price of oil will fall, so you
sell at $90.00 for €1 per cent
If the price falls to $84.96 – $85.00
If the price rises to $94.96 – $95.00
You buy at $85.00
You buy at $95.00
Your profit is
(90.00 – 85.00) x 100 x €1 = €500
Your loss is
(95.00 – 90.00) x 100 x €1 = €500

Gearing & Leverage

One of the key advantages of trading with spread bets is that it offers ‘gearing’ or ‘leverage’. This means you can make a bet without needing to put down the full value of that transaction and, as your funds are not tied up, you can make several bets at once2.

Risk Management

Spread betting allows you to make exceptional profits but losses can soon mount up too. That is why paddypowertrader offers one of the industry’s most innovative risk management systems. Whenever you place a bet we will automatically create a stop loss order for you, which will protect you from major losses without capping your potential gains. Of course you can alter this stop loss order whenever and however often you like. However please note that, as markets can gap, stop loss orders are not guaranteed and you can lose more than your original deposit. Click here for more information.

An Internet Service

Paddypowertrader is an internet service, and we provide a complete set of tools to help you get the most out of your trading. Our charts can be customised to be as simple or sophisticated as you want, while our application lets you monitor all your favourite instruments, buy and sell with ease and check your profits or losses in real–time.

Enrol In The Academy

If you want to find out more about trading the Trader Academy is a dream come true! It includes video tutorials on using our trading platform, a variety of humorous articles on the financial markets and links to some of the resources the Paddy Power traders use day in day out.

Demo Accounts

Of course the best way to learn is to practice, which is why we’re offering you a paddypowertrader Demo Account. Setup a Demo Account now and, with £10,000 in virtual funds to play with, soon you’ll be competing with the big boys.

1 Tax laws may vary if you live outside if the UK or Ireland and can vary from time to time
2 In spread betting it is possible for you to lose more than your original deposit

OCT
6
The Weekly Wrap
Ban On Short Selling

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