Multi-regulated broker, AvaTrade, is offering spread betting on popular global assets, including gold, Nasdaq, and GBP/USD. High leverage is available on spread bets, increasing purchasing power and potential returns. UK traders also do not pay capital gains or stamp duty on any profits.
What Is Spread Betting?
Spread betting is a derivative instrument that enables traders to bet on the price movement of underlying assets. Traders make money depending on the direction and extent of price movement.
To work out your potential profit or loss, simply multiply the spread (the difference between the buy and sell prices) by the number of units (the size of the position). For instance, if you buy a FTSE-listed stock at 50p and sell it at 55p, and you bet 20 units, your profit will be 100p (5p x 20).
AvaTrade offers spread betting on a range of underlying assets. This includes popular stocks and shares, currency pairs with the GBP, indices such as the FTSE, plus commodities like gold and oil. Spread betting lends itself to multiple strategies, from day trading and arbitrage to long-term trading and news trading.
Spread betting is typically used to hedge investments and is available for 24-hour trading, regardless of the standard operating hours of the underlying asset.
Importantly, the key charge is the bid/ask spread, though there may be a rollover fee if you hold your position overnight or beyond the stipulated period.
Spread betting is popular in the UK due to its tax-free status. This is because it is considered betting instead of investing. As a result, any profits generated from spread betting trading do not give rise to capital gains or income tax liabilities.
With that said, losses from spread betting can be offset against other taxes due in some circumstances.
Like CFDs, the size of your potential loss can rise depending on the extent of market movement, especially when traded with high leverage.
With this in mind, traders should ensure they have a risk management strategy in place, taking note of market volatility and liquidity, and adopting tools like stop-loss orders.
How To Place A Spread Bet
To make a spread bet, traders will need to register for a live account with AvaTrade. Next, make a deposit using one of the supported payment methods, such as debit card, wire transfer, Skrill, Perfect Money, or WebMoney. The minimum deposit for UK traders is £100.
Spread betting is available on the MetaTrader 5 platform. The terminal can be downloaded to desktop computers or mobile devices. Alternatively, a web-based solution is available on major browsers.
Next, simply choose from the underlying assets available and decide whether you want to buy or sell. Finally, choose the number of contracts and confirm the trade.
Sign up with AvaTrade today to start speculating on popular financial assets with leveraged spread bets.