Subscribe

feed image

Our FX reports

Adam Solomon's insight into business and corporate FX issues.
Your Questions on foreign exchange sent direct to the professionals.
The Economy News brings you the latest foreign exchange rate news.

FX Latest

The Virgin Spreader chronicles my journey into the world of spread betting.

This spreadbetting blog starts from day one of a novice spreadbetting career. I intend to hunt down as much advice on spread betting as possible, talk to as many professional spread betters as possible and develop a winning spread betting strategy. And I will write it all down here. If you have anything you would like to contribute PLEASE get in touch!

INSIGHT

Forex markets await the stress test
Mark Deans at MoneyCorp gives his morning verdict on the forex markets.Read more...
Standard Chartered warn of increased likelihood of double dip recession
Standard Chartered researchers say premature fiscal tightening could cause double dip recession....Read more...
Conservative dogma: The profound challenges of austerity
Why the Irish debacle of spending cuts is so important to Britain and dispelling the pro-austerity...Read more...
Israel vs Turkey: Concerns for the future of NATO
So what would be the consequences in the unfortunate event that Israel found itself in an armed...Read more...
Barclays: Not having a bank account costs £1000
A new report is issued by Barclays that looks at the challenges of increasing financial inclusion...Read more...
What is spreadbetting? PDF Print E-mail
Written by Gary Howes   
Monday, 21 September 2009 13:12
Fortunes have been made and lost on spreadbetting - Mike Ashley, owner of Newcastle United, reportedly lost £300 million on a long bet on HBOS, Vince Stanzione on the other hand made well over £2 million spread betting commodities.

As mentioned in the last post I have been doing some reading on the matter of spreadbetting before getting involved - what is spread betting?

How does spreadbetting work? can you make good money off spreadbetting? And can you give up your day job to do this from home?

The Sunday Times reports that there are well over a  million spreadbetters in the UK at present, and they note that this form of investing/gambling is relatively new for the private investor.

Barriers that once hindered access to the markets and making money off the markets have been broken down by the advent of new technologies and an array of spreadbetting companies and platforms that now offer access to the markets to those with relatively small amounts of capital.

Company shares, indices, commodities, options and forex are now all available to the private investor - and no broker needed.

I think it is this direct control that appeals to me and a lot of others that have been attracted to this new form of speculation. The idea of dealing through a broker does not sit too well with me, especially as I am new to investing on the afforementioned markets.

And importantly - there is another great advantage to spreadbetting - it is tax free where other forms of trading shares are not. Brilliant. Stockbrokers include commissions on trades and any profit made from the purchase and subsequent sale of shares is subject to Capital Gains Tax.

Risk and profit

As with all kinds of investments we can expect a degree of risk. The higher the gains that can be expected conversely implies that the risks are just as evenly weighed.

That is why I kicked off the blog with the blurb about Mike Ashley and Vince Stanzione. Mike Ashley clearly got it wrong, but what if he had got it right - I would say he would have made even greater profits had HBOS survived to this day.

Spreadbetting is leveraged - what this essentially means is that it is geared. Just as a gear in a vehicle is designed to amplify the revelotions provided by the engine and deliver more to the wheels, so spreadbetting amplifies the return, or loss, on a an initially small bet.

Now I am yet to get involved in spreadbetting - I imagine that things will become a lot clearer once I actually start placing trades and seeing first hand how this all works.