Benefits of spread betting
Take your capital further by spread betting – you’ll get a range of benefits including leverage, going long or short on thousands of markets and tax-free trading.*
Advantages of spread betting
Spread betting appeals to a range of traders, both beginner and professional alike, because it enables them to:
Make capital go further with leverage
Spread betting takes your capital further due to leverage. You can get full exposure, with just a small initial deposit – known as the margin. So, let’s say that you want to place a bet equivalent to £1000 of Apple shares that has a margin rate of 20%, then you would only have to put down £200.
It’s important to note that your profit and loss are calculated using the full size of your position, not just the margin. This means leveraged trading could magnify your profits as well as your losses. This is why you should never risk more than you can afford to lose, and manage your risk.
|Spread bet||Share deal|
|Your Apple position rises to £1025||You make £25, or 12.5%||You make £25, or 2.5%|
|Your Apple position falls to £975||You lose £25, or 12.5%||You lose £25, or 2.5%|
Go short or long
When you spread bet, you can take advantage of markets that decline in price, as well as those that increase. This is because you are betting on the direction in which an asset’s price will move, rather than buying the asset itself.
So, if you believe a market is going to rise in price, you would open a ‘long’ position, and if you believe a market is going to fall in price, you would ‘go short’.
Discover the differences between spread betting and share dealing.
For example, if you opened a short position on the FTSE 100, you would trade at the ‘sell’ price on your dealing platform. A short spread bet for £5 per point of movement would mean that for every point the FTSE moves downwards you’ll earn £5. But for every point that the FTSE moves up, you’ll lose £5.
Discover how to spread bet and see more examples.
Profit without paying tax or stamp duty
When you spread bet, any profits are yours to keep because they are exempt from capital gains tax – unlike when you invest in shares. And since you never actually own the underlying asset, you won’t have to pay stamp duty either.*
Trade a huge range of markets
You can spread bet on over 17,000 markets including shares, forex, indices, commodities and more – all via a single login.
Hedge a share portfolio
Hedging can be a great way to offset risk, or at least limit losses to a known amount. You can hedge your share portfolio by spread betting on an asset that tends to move in a different direction to the shares that you own.
For example, if you own shares in an oil producing company but falling oil prices were causing the company’s share price to suffer, you could open a short position on oil to hedge your risk. This would mean that any loss to one position would be offset by profit to the other.
Access out-of-hours trading
Trading hours vary by market. For example, while shares and commodities trade when their underlying exchange is open, forex can be traded 24 hours a day.
When you spread bet with us, you can also trade out of hours on key indices like the FTSE 100, Wall Street and Germany 30 – alongside the popular currency pair GBP/USD. We also offer ‘all sessions’ trading on key US shares, so that you can trade both pre and post-market sessions.
It’s important to note that a market’s opening price may differ from its out-of-hours price – so your position may be adjusted.
Trade without paying commission
You won’t pay commission when spread betting, as the cost of opening your position is covered in the spread – the difference between the buy and sell prices you’ll see in your platform. And with us, you’ll get competitively low spreads across a wide range of markets.
Discover our costs and charges.
There could be other charges to pay once your position is open, such as overnight funding charges.
* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.