In a nutshell, Spread Betting is a tax–free*, commission free alternative to trading shares and financial markets. This means that you don’t pay Capital Gains Tax or Stamp Duty, and you don’t pay a stock broker’s commission or account fees.
One of the major differences between trading the stock market and Spread Betting is that with Spread Betting, you don't actually own the share, you just bet on the performance of the share price.
Financial Products
Spread Betting is not limited to just shares, but also includes a wide variety of financial products such as:
- Indices
- Stocks
- Bonds
- Currencies
- Commodities
- Interest Rates
If you think the financial product is going to go up, you buy a bet (in spread betting we call this going long). However, if you think it is going to go down, you sell the bet (we call this going short or shorting). How much you win or lose then depends on how much the price goes up or down.
* Tax laws may vary if you live outside of the UK or Ireland and can vary from time to time
