The Benefits Of Financial Spread Betting
By benfin Follow | Public

There are many benefits of financial spread betting ( or even margined trading as it is also often known as.

Given below are some of them:

a) To start with, this trading instrument is much easier to understand as compared to futures and options, CFDs and so on. Unless you understand a particular trading instrument clearly and how it can be used to your benefit, you would not enjoy trading with it. The simplicity of financial spread betting gives it a huge advantage over others.

b) None of us would like to pay tax if we can help it. When you make some profits, it will indeed hurt if some portion of it is deducted towards tax. Fortunately in the case of margined trading, any profit you make is fully tax free. That is because of the manner in which this trading instrument is perceived by the authorities. They perceive it to be a gambling instrument and thus do not charge any stamp duty or capital gains. There is no physical exchange of stocks. The only tax that is liable to be paid is the 3% tax that the company needs to pay and that is something it incorporates into its spread that is offered to the customer. Thus margined trading is beneficial to the trader as well as to the spread betting company offering the spread.

c) Since you pay no taxes or are not required to pay any tax on spread betting trades, you do not need to maintain any documents or records of trades that you would have to do otherwise with normal physical or futures trading to pay your taxes. That in itself is a great relief as organization of such records can be quite a cumbersome process.

d) The potential to earn high profits due to the leverage component is yet another benefit of spread betting. Though such an advantage also exists with futures or CFD trading, the fact that you get the benefit of leverage and not pay any tax or brokerage is a huge benefit that is unique to financial spread betting.

e) The advantage of being able to make phased exits if the movement of the market is not favorable to the position taken is another one that spread betting offers. Though you can do that in the physical market too, the brokerage fees on each transaction would invariably compel you to hold on to your position and you could end up with a loss should the market take a nose dive the next day.


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