Spread Betting - A Different Way To Invest
Posted by | Posted in Day Trading | Posted on 02-10-2009
Binary Betting is an exciting new way to bet on financial events. How does a binary bet work? Binary bets are a different type of bet where you can trade on the performance of a particular financial market and there are just two outcomes, settling either at 0 or 100.
Just like spread betting, the profits are tax-free*. (*Tax law can be changed or may differ depending on your personal circumstances.) Take the FTSE for example. What is the FTSE? Pronounced the Footsie, the FTSE stands for Financial Times Share (or stock) Exchange and the 100 means the top 100 companies involved.
When betting on the FTSE, for a binary bet up, you will be offered a market price for example the FTSE 100 or Gold and whether it will close up on the day. The binary bet is quoted somewhere in-between 1 and 99. Lets say it is quoted at 63-65. If the index closes higher than the quoted price on the day by however many points, then the binary bet will settle at 100 .
And if it closes lower the quoted price then it settles at 0. Binary bets can not rise above 100, nor fall below 0. Binary Trading is not subject to regulation by the Financial Services Authority.
When spread betting stock indices, you have a range of global indices in which to spread bet, these include but not limited to FTSE 100, FTSE 250 and Wall Street. A stock market can be referred to as a global stock market or world stock market. The most commonly quoted market indices are national indices. For example on the London Stock Exchange there is the FTSE 100, or on the French stock market index it is called the CAC 40 and in Australia it is the Australia 200. Spread betting indices is one of the most popular forms of spread betting with a huge range of indices across the globe to choose between.
Commodities are a volatile market, and this makes them a popular market in which to spread bet. When something is volatile, it means that the commodity is subject to various things that can affect the price of it, for example adverse weather, threat to supplies and even things like disease. Why does this make them a popular market to spread bet? Because if something is volatile, it means there are good profits to be made, however unfortunately this also means there are big losses to be made.
Commodities are things of value that are produced in large quantities by many different producers. Commodities can include coffee, cocoa, natural gas, gold, silver, and many more.
Commodities can have a busy and quiet season, so it is a wise idea to study up on the various commodities and factors affecting their production before spread betting with real money. If you understand the different commodities then this will give you an edge on many spread betters who jump in with no clue about the commodity.
And the golden rule always applies. Smart spread betters know that you should only ever bet with money you can afford to lose and you should always know the risks involved as spread betting is a leveraged product and can result in losses that exceed your initial deposit.
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