Introduction to the Spread Betting Guide

This guide is the work of a person who actively trades the financial markets.  Initially, the author recommend that you read through the entire guide to give you a basic understanding, and don’t worry at this stage about absorbing everything. Thereafter, you should treat the guide as a manual, referring to it regularly as and when required.

The reason is simple. The commentaries on the web site often make reference to the material in this guide, and you will be able to see some of the principles actually being applied to specific markets over a period of time. This is a very efficient way of learning. Read, study, watch and apply.

In my opinion, spread betting is not something for a chosen elite, nor is it something that you should do without care and skill. Please take the time to become familiar with the markets, and to learn the rules and techniques outlined in this guide. If you are methodical and disciplined in your approach then you will have a good chance of making money from spread betting. Some of you may go on to make a lot of money.

“Whilst other forms of trading can be complex, financial spread offers you simple access to individual stocks, indices, foreign exchange and commodities all from one easy to use web based trading platform.”

The Simple Way to Trade the UK Stock Market

Spread betting has been around for a while. I loved spread betting the first time I came across it. You could call it love at first sight. It allowed me to participate in financial markets with a relatively small amount of cash. This is because of leverage, something which you can take advantage of that ‘normal’ share traders usually cannot. This is one of the many attributes of spread betting that can make it a success.

My hope is that this guide will help you towards your own success at spread betting. I must warn you that this e-book does not contain a ‘system’ or ‘strategy’ promising you £500 a day with just 5 minutes work a day, which is the usual sales hype associated with spread betting. It will not help if you have an addictive condition such as gambling.

Instead, this free resource is a genuine attempt to help you understand what spread betting is about before placing a single trade. It is the same way I evaluate risk on a personal basis. You may have already started spread betting and still have a few questions about the risks involved, or you may be thinking about spread betting as a second income and want to learn more. This e-guide is designed so that you know the risks before ‘pulling the trigger’.

Earning a second income from spread betting takes a lot of hard work and an understanding of risk and psychology. Like anything in life, if you are determined to succeed then you probably will. This e-guide is a good starting point for inexperienced traders and a good reference work for the more experienced.

Dispelling some Myths

Now, let me dispel some fears about the term ‘spread betting’ – the term has misled some people into thinking that the activity is in some way similar to fixed odds betting. This is where a bookmaker gives you odds, the bet is placed and an outcome of win or lose then occurs. That’s it. The bet is over. You placed the bet, you could not have changed that bet at any point after you placed it. It was a pure short-term gamble based on the information available to you at that time and (probably) a hunch or ‘gut feel’. It is typically a one-event bet, over and done with on a transient basis.

The reality in financial spread betting is completely different. Financial spread betting allows you to ‘bet’ on a longer-term basis, and allows you to amend your position at any time, increasing or decreasing the size of the bet, or moving stops, etc. You can go on to open new bets or close down your existing position at any time and, of course, this strategy lets you ‘live to fight another day’ in the event that your position does not go in your favour from the outset.

The unique structure of financial spread betting means that under the umbrella of one spreadbetting account, you are able to deal in many financial instruments, including: Individual Stocks, Stock or Sector Indices, Currencies, Metals, Commodities, Bonds and Interest Rates. You are able to place trades Long or Short i.e. Buy in anticipation of a rise in prices or Sell in anticipation of a fall in prices.

“The average private client who is starting out in spread betting is someone who may well have dealt in stocks in the past and our educational guide is designed to help you feel confident with this trading product and other markets that are available to trade.”

The ability to trade in much the same way as City traders enables you to maximise profit opportunities, BUT it does mean that you must fully understand the relationship between what seems to be a small bet and a potentially large loss.

At the present time all trades are free of Stamp Duty and profits free of U.K. Capital Gains Tax and Income Tax. You can do it full-time or part-time, even a few times a year. As long as you have access to a telephone or the Internet or even a mobile application (say, iphone) you can trade from home, on holiday, at university or even your place of work. You are in complete control of your positions, e.g. when to enter and exit the market and when to capture your profits or limit any losses. You can place single trades or more complex multi-trades providing you have sufficient speculative capital.

But you really have to open a special ‘spread betting’ account to benefit from the tax free status? Surely as it falls under UK legislation if I live in the UK (as I do) then I shouldn’t pay the taxes regardless of what account I decide to open with them?

Yes, you do have to open the special ‘financial spread betting’ account to benefit from the tax free status. Even though it’s the same product, it has to have a special classification for it to technically be considered spread betting…as odd as it may sound.

Personally I love spreadbetting, and have been trading for the best part of a decade. I have had my fair share of ups and downs but in the latter years have experienced a steadily rising equity curve.

I am not alone. This form of trading has become very popular and is still a growing industry. The ease of which you can open an account and the small startup capital necessary to do so have proved a big hit with those who would not normally have been able to trade the markets. Spreadbetting has proved so popular in the UK that many of the traditional stock brokers and banks have now adopted their own online spreadbetting platforms.

According to a spreadbetting whitepaper the average demographic for a spreadbetter is an affluent white male under 45. This is changing as a number of other demographic groups are becoming more familiar with the internet. And as people worry about their pensions many people are wanting to become more “hands on” with their own finances, spreadbetting is becoming the tool of choice among a growing band of retail investors.

There are many clients who, understandably, still find some aspects of trading markets confusing at first: for example short selling; leverage/gearing; and risk management. Here at we aim to give you a thorough grounding in the art of financial spread betting. We will not make any assumptions and we will clearly explain everything we believe you need to know.

This online trading manual will be continually improved wherever possible. You will find interim add-ons and updates, from time to time, which are all aimed at presenting an easy to use, jargon-free body of trading information and knowledge. We will also be starting a ‘blog’ soon, so we can interact with each other – let me know [email me] if you want to take part – let us have your opinions/views/comments.

The stage-by-stage guide is designed to make your life easier and includes sections where the advantages and disadvantages are carefully explained. In the guide we tell you all you need to know about spread betting, from the basic features to the tax benefits and trading strategies. We have also added a number of resources, and web-links to brokers, to add to your knowledge base. If you have any questions about spread betting, of course do not hesitate to contact us.

Thank you for taking you time to read this e-book. I hope it sets you out on the right path.

“Throughout this Online Manual, we have aimed to keep the learning process as simple and to the point as possible. It is not necessary to enter into in-depth discussions and complex strategies in order to demonstrate what is important about trading.”