Financial Spread Betting
Financial Spread Betting
So, what exactly is this Financial Spread Betting or Financial Spread Bets? I guess the simplest way to explain it is to take a quick look at how the stockmarket operates. When you decide to buy or sell stocks or shares, commodities or other investments and indexes, you use a stockbroker (make sure they are regulated correctly).
When you get a price from this stockbroker, they will usually give you 2 different prices. Why is this? Well now the prices are dependent upon whether you are choosing to buy or to sell shares or stocks at that point.
The one price which appears as the lower priced stocks is the selling price or “bid price” and when you decide to get rid of your stocks, this is the price you will receive and obviously it fluctuates up and down with the stockmarket all the time. There will be a margin of difference that comes up betwen the bid price and the offer price and you need to accept this.
Next we have the price you receive when you want to buy stocks, and this is called the “offer price”. Commodities and stocks offer prices are always higher than the selling price, the difference could be seen as the traders cut. So always work to the higher price when you want to buy stocks. Once it goes into your portfolio, with commissions and this margin difference, the value drops usually to start with.
Ok, so with that cleared up, now we move on to financial spread betting and how it fits around the offer price and the bid prices. When you decide you want to invest and gamble on the stock market using financial spread betting, you will use these principles and therefore if you decide that the value of the stock will go up, then you choose to buy your financial spread betting investment at that particual offer price that is on offer, index, stock, commodity, and hope that the price increases.
If you decide however that the stockmarket is falling, and your market research shows this, then you will choose to go for the bid price of the share for your financial spread betting.
You will have the choice of getting the stocks either per points or per penny wager that you place. What this is, is you simply bet either by per penny move or per point move, and in either direction, up which is the offer or down which is the bid price. You should state how many points or pennys you wish to pay for and the amount per penny or point. So if you go for £100 per penny and for 5 pennies offer price, then if it moves up by 5 pennys you get £500 back. But if you get this wrong and it drops by 5 pennies it will cost you £500. So be very careful!
There are obviously great gains to be made from people who know these financial spread betting markets and systems inside out, but it is also worth stating that you can also lose, so if you wish to move forward with this, make sure you do thorough research first.
Having said that, for the right people financial spread betting seems to be far more exciting than the stockmarket as they can grab great gains quickly, and adds an edge to their investments, as it can take a few years to grow a decent portfolio of shares in the FTSE or NASDAQ stockmarkets.
You just need to buy and sell at the right the shares and stocks at the right times. and in the right direction, so getting your offers and bids prices in right direction is crucial.
Financial Spread Betting can be extremely lucrative when done correctly and lots of money can obviously be made. However always do these type of investment bets with great care and attention.
