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Spread Betting On Shares

In simplest terms, spread betting on share prices is basically putting your money on surmising which way share prices are going to move, up or down.

Technically, you can profit just as much, or more from ordinary share trading with spread betting on shares however due to the slightly different nature, it may take a while to get accustomed to the idea. However, in recent times, avid share traders are slowly embracing the idea of spread betting as they have identified the benefits over conventional share trading.

With share trading, one of the major hindrances is finding a talented and trustworthy stock broker, and providing a commission for them as well after doing so. With spread betting, the need for a stock broker is eliminated making the entire process a lot more convenient and profitable. Another advantage is the absence of tax and other miscellaneous costs such as stamp duty.

You can also take out a much larger position on a share by use of margin. Using margin as leverage allows you to deposit only a small percentage of the money required for the position and take a trade far larger than you could normally. However, be aware that using margin also carries more risk, and you can lose the money on deposit and possibly more if you do not use stop losses correctly.

In terms of uncertainty, both, traditional share trading and spread betting incur similar level of risk. Another major difference between these two methods of investment is dividends. When you have gained ownership of stocks, depending on the type of stock, you may be entitled to dividends or a percentage of the profit from the company you bought your shares from depending on the quantity of stocks bought, with spread betting this advantage is not available. However, due to the liability of tax that can be enforced on your dividends, investing on spread betting is still more profitable.

Currently, spread betting is certainly not as widespread as share trading. The primary edge that spread betting has is the omission of capital gains tax however this may change in the future as tax authorities recognize the potential of spread betting, thus investing in spread betting in present times could be a very profitable and viable solution over share trading.

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