In the past, only City Whiz children had instant access to real-time market information that involves spreading betting on companies and markets. But as the difference between the differences (CFDs), the popularity of the spread of betting has exploded, especially with the advent of the internet.
It is said that the spread of betting is a risky way of puncturing the stock market.
And beware: the loss is terrible if you get it wrong wrong. With traditional mortgaged bets, you could go to bookmakers and place bets and if you're lucky something like mine, you'll lose your money.
Spread betting is a completely different animal. Work on top is potentially unlimited. Get it wrong and you're not so much after chasing your loss, but they stop chasing you.
But it's also a lot to recommend. Buying things in a traditional way is a simple bet. You are wagering on stock increases. Spread bets allow you to bet on a unique share, or indeed the entire market – as well as you buy against him.
And it allows you to bet on all types of markets and events – from gyrations of FTSE 100 through to the results of cricket games.
Plenty of theory, here's how it works
Better spread like the IG Index will quote you two prices the same as the stock market would – give you bids and bids.
One of the favorite bets is the point of motion of the Footsie (FTSE 100 Index).
We offer a width of 5,700-5,705. So what exactly does that mean?
If you think Footsie is likely to exceed 5,705 then you would guide the broker you wanted to buy. And if you expected to dip below 5,700 then you would advise the broker to sell.
Well, let's say for the sake of the scratch, we think the market will finish the day below 5,700 – maybe we think of a recent good business, then we'll be earning profits.
So we say our bookmaker to sell. In fact, we are extremely safe and have £ 50 for each team that Footsie is under 5,700.
Distribution betting company will fix prices that reflect market movement. So about noon, distribution has been brought to 5,675-5,680, which means that Footsie has fallen.
Fear of revival we want to take our profit on the bet. So we do it exactly?
Well, we would ask the merchant to buy.
New purchase price as we can see is 5,680. We know we have won the weather with the spread of the company's bet. But how much have we done?
All we need to know is the difference between the prices we sold Footsie and point where we bought to close our position.
Math is quite simple. 6,700 minus 6,680, giving us 20 points difference. And remember, we were very confident about our ability to predict the movement of Footsie so we got a 50 pound point.
It gives us a neat £ 1,000 profit. Not bad for work tomorrow. And remember, this is a bet with a bookmaker so there is no capital income tax or stamp duty. Is not it just dandy?
Well, see what happens when everything goes badly wrong. Let us bet on Footsie.
We will not change much, unless we awake and thought, well, Footsie is on a roll and instead of selling bought.
Remember that our distribution was quoted as 5,700-5,705. We bought at 5,705. So quite above this level is clear profit. And we were in this existence, if something more bullish, so we landed at 100 pounds.
Rash, I would say that this is the first time we have ever made a spread of bet.
But instead of melting ahead, Footsie starts losing and at noon, getting bored of our folly and we decide to cut our losses and close the position.
Remember that lunch was 5,675-5,680. To close, we need to sell and make it at 5,675. To calculate the loss we make the difference between the price we bought and the price we sold.
Thus it gives 6,705 minus 5,675 differences in 30 levels. Remember now what rash we were? We caught 100 pounds and gave us a loss of 3,000 pounds. For a giant manager in the Premier League, which is probably less than wage salaries.
But in most cases it's probably equivalent to almost two months & # 39; net salary. Ethical of this story? Well, obviously, do not betting what you can not afford.
But I would say if you're going to be as risky and complicated as a bet that guarantees you know the risk. Investigate as much as you can around the system. Accept a loss (which limits the hills) if offered.
Distribution betting companies are not evil, they take every opportunity to educate and spell out potential traps. If they offer you training, please accept it.
Above all, do not bet until you understand all the risks involved.