Introduction to Spread Betting
Spread betting is a way of wagering on the stock price movements. Instead of a regular ‘win or lose’ result, the pay-off here is based on the accuracy of the wager.
Under spread betting, the spread betting company will quote two prices - the bid and the offer price, also called, the spread. You, in turn, can bet whether the price of the underlying stock will be lower than the bid or higher than the offer price. If the market value changes as per your prediction, you will make a profit. On the other hand, if your forecast works out to be false, you will incur a loss. The amount of profit or loss depends on the market movements.
Spread betting allows you to trade on the financial market without holding the underlying stocks directly. You can take a position in any direction, to gain from the exposure to the movements. If you choose to go long and the price of the underlying stock eventually does rise, you will earn profits in line with the rise. On the other hand, if the price falls, you will incur losses. Similarly, if you go short, your profits will rise in tandem with any fall and vice versa.
Under spread betting, the spread betting company will quote two prices - the bid and the offer price, also called, the spread. You, in turn, can bet whether the price of the underlying stock will be lower than the bid or higher than the offer price. If the market value changes as per your prediction, you will make a profit. On the other hand, if your forecast works out to be false, you will incur a loss. The amount of profit or loss depends on the market movements.
Spread betting allows you to trade on the financial market without holding the underlying stocks directly. You can take a position in any direction, to gain from the exposure to the movements. If you choose to go long and the price of the underlying stock eventually does rise, you will earn profits in line with the rise. On the other hand, if the price falls, you will incur losses. Similarly, if you go short, your profits will rise in tandem with any fall and vice versa.
