Make Money with Spread Betting
February 1st, 2010
Financial markets throughout the world move up or down every day. In recent history, many of the world’s financial markets took a huge hit and dropped. Some of those markets have started to make a comeback and are gaining points or value once again. There is a method of investing called spread betting that allows an investor to wager money on the movement of the markets. This type of investing is much more than just making a guess at whether a market will go up or down, however. There is a great deal of research that needs to be done before a person should feel comfortable making these wagers.
Let’s look at a simple example of how spread betting would work. Pretend that the Dow Jones Industrial Average has started the day at 10,000. An investor could look at the latest market trends and decide if they think the market is going to go up or down for the day. They would then call a firm and ask for their spread for the day on this market. They can either place an up bet or a down bet, also referred to as a buy or sell. If they want to buy, then they could put a set amount of money down per point that the market goes up. The buy amount might be something like 10,150, and the sell might be 9,900. During that day, the market goes up to 10,150, so you would profit $1,500 because you put down $10 per point.
In a similar example, you could have placed a sell or a down bet on that same day. If the market went up to 10,150, then you would lose $1,500. If the market went down to 9,900, then you would profit $1,000 on that down bet. You can see that spread betting can be a very risky and volatile way to invest your money. Many people enjoy this type of investing because it does offer some distinct advantages.
Some of those advantages include no taxes and no commissions on any profits that are made. This is one way that spread betting differs greatly from investing in the stock market. Doing research and making informed decisions is the only real way to have success.
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