http://www.financial-spread-betting.com/Spread-betting-vs-trading.html
Differences between Spread Betting and Share Trading
Good Differences - Spread Betting Versus Trading
Leverage
Spreadbets are leveraged, so with £1k margin, if you use, say, 10:1 gearing, you can gain the equivalent to £10k's worth of shares. Of course, then it only takes the shares to fall 10% to wipe out your margin. It's the same principle as property investment (with a mortgage). With traditional share dealing more money is required to cover the same amount you could with a spread bet. Of course with leverage comes risk - ultimately it is up to you to use good judgement and use leverage wisely.
Liquidity
Many stocks aren't very liquid. With spread betting opening a trade is however very easy and since most spread betting platforms are based on the market-maker model you can close out positions quickly.
No Taxes
Right now, there are no taxes on spread betting profits. No stamp duty, and no capital gains tax if you are fortunate enough to have a gain. This situation could change. The authorities in a number of jurisdictions are studying spread betting with a view to bringing it under the auspices of the same agencies that regulate mainstream investments. When this happens it is reasonable to expect that there will be some political pressure to impose taxes as well.
There also appears to be a general consensus that spread betting is 'dirty', 'low rent', not 'nice and clean' like direct market access...that's boll0x...not paying the revenue a penny of your winnings far outweighs the spread fees involved and the image issues. Making a grand in a week and keeping it, (despite the spread trading company making perhaps 200 quid out of your efforts) is OK by me...
Going Short is the same as Going Long
Short selling is when a trader takes the view that the market, or a particular stock, is in a downward trend, or the price is about to collapse for some reason. There are a number of mechanisms to allow this belief to be exploited. The most common are short selling of the share, and the purchase of PUT options. Of course, if you already owned the share it is open to you to simply sell it, or if you wanted to retain the stock you could sell covered CALL options.
Where short selling or the purchase of PUT options is contemplated, the trader will immediately come up against a number of obstacles. In order to sell short, the broker must be able to borrow the required number of shares to sell, until such time as the trader decides to close his or her short position and buy them back. This could prove to be difficult. In addition, certain shares will not be eligible for short selling at all. These will be securities that are already at a low price to begin with. In Europe, in particular, many brokers will not allow anyone to sell short.
Where short selling or the purchase of PUT options is contemplated, the trader will immediately come up against a number of obstacles. In order to sell short, the broker must be able to borrow the required number of shares to sell, until such time as the trader decides to close his or her short position and buy them back. This could prove to be difficult. In addition, certain shares will not be eligible for short selling at all. These will be securities that are already at a low price to begin with. In Europe, in particular, many brokers will not allow anyone to sell short.
Aside from that, a plan also limits the possible subjectivism of a trader because there are strict actions that the trader needs to abide.cash back
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