Quick gains and substantial returns on investment are the main features that attract many people to spread betting. However, the highly unpredictable nature of financial markets and the risks associated with leverage lead to many traders making losses in the long term. Read on to discover what spread betting is all about and the best tips to help beginners generate steady returns in the long term.
So, what Is Spread Betting? According to Capital.com, Spread Betting is a tax-free derivative product that enables traders and investors to benefit from price fluctuations of underlying financial assets, including stocks, commodities, indices, and currency pairs. The trader takes a position by placing a bet on whether the underlying assets price will rise or fall. If the market moves in a direction in line with your speculation, you make a profit. If the market moves against your prediction, you make a loss.
Spread betting is attractive to many speculators because it does not require the trader to meet the complete requirement for the trade. Instead, the trader takes advantage of leverage, whereby they only raise a small portion of the deposit while the broker covers the remaining amount. With spread betting, speculators don’t pay commissions to the broker, and the gains are tax-free.
How To Withdraw Money From a Spread Betting Account
Withdrawing funds from a live spread betting account is easy and takes only a few steps. Navigate to the live accounts tab, then click on the withdraw funds button. Several withdrawal options are available, with bank transfer being the most popular. Other options include debit cards and digital wallets such as PayPal.
After initiating the withdrawal, there’s a waiting period that varies depending on the withdrawal method chosen. Most banks facilitate access to funds within 24 hours of the withdrawal request, while others might take three days.
There are also regulations on the maximum and minimum amounts a trader can withdraw. Generally, bank transfers do not have maximum and minimum withdrawal thresholds, while card transfers and PayPal have maximum thresholds per day and per transaction.
Spread Betting and Risk Management for Beginners
Risk management is one of the essential strategies in spread betting. Sound risk management strategies generate net gains even when some of your bets are against the market movements. Good risk managers are those that avoid emotional betting and diversify their portfolios by trading in uncorrelated assets.
Before placing your bets, ensure you have a good understanding of the assets you intend to speculate on; make sure you are fully aware of the potential upsides and downsides of the underlying asset. Secondly, though leverage is a great tool to have in your trading plan, the use of excessive leverage can work against you when the market moves against your bets.
Today, both individual investors and private firms speculate widely on financial markets through spread betting. Unlike fixed derivatives and alternative investments like real estate, spread betting offers the unbeatable allure of instant profits with low financing costs.