<iframe src="//www.googletagmanager.com/ns.html?l=en-GB&wl=ETX&id=GTM-K79WJF" height="0" width="0" style="display:none;visibility:hidden"></iframe>

What is Spread Betting?

Read more about what spread betting is, how to trade and discover a range of tips and strategies.

Spread betting is a means for traders to speculate on the price direction of a wide range of financial markets. As the trader never owns the underlying asset, financial spread betting is described as a derivative-based product which allows trading on thousands of different markets such as forex, shares, indices, commodities and bonds. Invented in the US in the 1940s, financial spread betting gained traction in London from the 1970s on, where it is now one of the primary trading vehicles for retail and institutional investors. In recent years the advent of sophisticated online trading platforms has enabled spread betting to flourish.

Unlike buying shares in a company, in spread betting the participant never owns the underlying instrument. Instead they speculate on the direction of prices quoted by the broker. Spread betting is offered as a derivative-based trading product across forex, commodities, indices, equities and bonds.

What is the Spread?

What is the Spread?

The spread is the difference between the ‘bid’ (buy) and ‘ask’ (sell) prices.

What_are_Spreads

The spread betting provider derives its earnings from this spread. Unlike other forms of trading, this means that there is no need for the trader to pay a commission when spread betting.

What makes spread betting different?

What makes spread betting different?

Leverage

Spread betting is characterised by the use of leverage. In this regard it is similar to trading contracts for difference (CFDs), although there are other important differences. Leverage, which is usually offered at a margin ratio of anything up to 200:1 on the most traded products, means that traders can take larger positions in the market than if they were simply to buy the underlying instrument. Leverage magnifies losses and gains and means that losses can exceed deposits.

Tax-free*

Unlike other forms of trading, such as buying shares or trading CFDs, spread betting in the UK is free from tax. For UK investors, any profits from spread betting activities are exempt from capital gains tax and stamp duty. However, this means that losses cannot be used to offset an individual’s tax liabilities.

Long or short

Spread betting enables participants to take long or short positions depending on their view of the market. As you are not required to purchase any financial asset, you can speculate on the price moving down as well as up. This makes it one of the most flexible ways to trade on shares and commodities in particular.

Range of markets

As a derivative product that does not require the trader to directly access the market, spread betting enables participants to trade on thousands of global markets around the clock. Spread betting platforms enable trading on stock market indices, individual equities, commodities, forex, bonds and other niche markets such as ETFs.

SHARE THIS

« PREV

New to
Spread Betting?

NEXT »

Spread Betting
vs CFDs

Spread Betting?

Spread Betting vs CFDs

Spread betting and contracts for difference (CFDs) are leveraged-based derivative products for trading on thousands of different...

READ MORE

Spread Betting Markets

At ETX Capital, there are more than 5,000 tradeable markets across forex, indices, equities, commodities and bonds.

READ MORE

How to Spread Bet?

Spread betting lets you speculate on the future price direction of a security, such as Apple shares. If you think these will rise...

READ MORE

Spread Betting Overview

Join one of the UK’s leading spread betting providers to enjoy access to the world’s markets. Instant execution, powerful...

READ MORE

New to Spread Betting?

Spread betting is a tax-free* way for investors to trade on thousands of global markets across forex, equities, indices, commodities and bonds.

READ MORE

What is Spread Betting?

Spread betting is a leveraged-based derivative for trading on thousands of different financial markets.

READ MORE

Spread Betting Tips and Strategies

Leverage, targets, stop-losses, limit orders, margin calls - traders are always on the hunt for information.

READ MORE

*Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.

One Broadgate Circle, London, EC2M 2QS

New Accounts: +44 20 7392 1400

Existing Customers: +44 20 7392 1434

Monday to Friday: 7:30am - 9:00pm

ETX Capital Payment Types.
English United Kingdom (Change)

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets orCFDs work and whether you can afford to take the high risk of losing your money.

Monecor (London) Ltd is a member firm of the London Stock Exchange. Authorised and regulated by the Financial Conduct Authority with Financial Services register number 124721.

The information on this site is not directed at residents of the United States, Belgium, Canada, Singapore, or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

In the unlikely event of ETX becoming insolvent, segregated client funds cannot be used for reimbursement to ETX Capital’s creditors. If we are unable to satisfy repayment claims, eligible claimants have the right to compensation by the Financial Services Compensation Scheme (FSCS), up to £50,000. If one of the banks ETX Capital uses to hold client money goes into liquidation then the losses would be shared by clients in proportion to the share of the money held with the failed bank. Funds lost this way may be compensated under the FSCS up to a limit of £85,000 per person.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.