I have just been watching the Chancellor of the UK present the budget this lunchtime. A quick look at the markets and you will see that they are down by 1.5%. Most people who have stocks and shares will have lost money today but there is a way of making money during falling markets and that is through FTSE spread betting.
So what is FTSE spread betting? The name ‘betting’ gives it a bad name. Yes it is betting but so is all financial ‘trading’. What happens is that you decide which way you think the FTSE 100 is going to go and then you take a position either long or short.
There are also different types of bets that you can put on. The binary bet will suit you more if you just want to be rewarded for either being right or wrong. This is a bit like sports fixed odd betting as you know exactly what you will win or lose beforehand.
The other bet that you can use with FTSE spread betting is daily bets or rolling daily bets. These work differently to binary bets as the amount you can lose or win will vary depending on performance. This amount is determined by how much the market either moves in your favour or against you. Either you are very right and win a lot or you are very wrong and lose a lot.
This trading does give you flexibility but it does have its risks. This is because it uses leverage as you trade on a margin. This is really useful when you are right but if you are wrong them it will punish you.
FTSE spread betting has disadvantages and advantages and it is up to you to decide if it is suitable for you. You may have seen that the Chancellor increase the rate of capital gains tax today. You will be please to know that spread betting is currently exempt from tax in the UK.
