5.7.1 Spreadbetting

Instruments and Platforms

On the spread betting platform, the first important to understand is:

  1. You do not own the underlying asset.

  2. We are betting on the direction of the underlying asset or instrument. The good thing to know is that for spread betting, because it comes under the gambling laws of the UK, this is tax free. This is because we are betting on the direction and we do not own the underlying asset.

  3. The difference between the buy and the sell price is the spread and the spread betting broker profits from that.

  4. It gives a very high leverage – High leverage always comes with risk as well. Therefore, it is critical to have risk management, which we will be talking more in the other modules.


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