Things You Should Know About Spread Betting
By: Sergey Trishchev
Earlier, financial spread betting was not that popular. Not many people used to involve in it. It was a measure to earn some extra money for few people. Now, before we get in to detail, let's understand what financial spread bets is all about? There are many types of wagering and betting is simply any type of wagering as a result of a particular event. Here, spread is the range of the outcomes of a particular event. In case of financial spread bet, the bet is on whether the outcome will be above or below a particular spread.
In United Kingdoms, there are many gamblers who practice spread betting as a profession or the only way to earn livelihood. Financial spread trading has also resulted in a rise of market growth in United Kingdoms. When one earns profit, the process involves risks. Similarly, in case of spread trading also, there are many risks involved. One can earn huge amount of money and loose much more amount of money while involved in financial spread betting. To regularize this huge market of betting, financial services authority of United Kingdom looks after it. There is an authority control of Gambling Commission on spread betting in United Kingdom.
Spread betting was invented by Charles K. McNeil in 1940s. It was in 1980s that it became popular in United Kingdom. Since then there is no looking back for this market. The biggest advantage for traders here is that if a person earns a profit from spread betting, he or she need not worry about additional tax. This is because profits earned from financial spread trading are free from Capital Gains Tax and also Income Tax for those who can show that they have another source of income to support themselves financially. However, if a person is only involved in financial spread betting for their expenses and have no other source of income, the government require them to pay Income Tax on the profits. This is to ensure transparent tax system.
Loosing money is one risk and this one is the major risk involved in spread bets. Other risks can be that when a person looses a lot of money he might want to better his situation by getting money from unlawful ways. People have committed crimes to pay off there debt which they build up while betting. It is always better to study market before putting your money on stake. It has been observed from past trends that people involve more in to leveraged trading when the market goes down. This way, these people try to lock profits for themselves.
Financial spread betting is based on basic business principle. And this business principle says "If you want to earn profit, you need to be ready to face the risks involved". If someone is ready to take this risk with proper manipulation of pros and cons of the trade, that person can never loose his money while in to financial spread betting.