FTSE Spread Betting Guide

The Chancellor of the UK has just finished reading the emergency budget to parliament. I can see that the stock market is down quite a bit. Most people who are invested in the stock market will lose money as a result of this. There is a way of making money when the market falls and that is through FTSE spread betting.

A lot of people don’t know what FTSE spread betting is. It is a way of trading the financial markets which is a bit different from owning the actual shares. You make a bet on which direction you think that the market will go either up or down (you go either long or short).

There are 2 popular bets that you can use. The first is the binary bet. This is very similar to bets in the sporting arena where you know the how much you can we or lose before you start. It is a very transparent way of doing it.

The second way of FTSE spread betting that I will go through is the rolling daily bet. The daily bets are still more common than the binary bets although the binary bets are increasing in popularity. The main difference between the two is that with the rolling daily bet you win or lose depending on how right you were. If the FTSE moves in your direction a bit then you win a bit, if it moves in your direction a lot then you win a lot.

Trading this way gives you great flexibility but at the same time it can be very risky. You trade on a margin so you are using leverage. This means you can lose more than your initial deposit if you get it wrong.

There are advantages and disadvantages to FTSE spread betting. Another advantage is that it doesn’t incur capital gains tax in the UK. Capital gains tax was increased in the budget today so makes this more appealing.