Spread Betting Markets
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- Spread Betting On Indices
- Spread Betting On Stocks and Shares
- Spread Betting On Currencies (Forex)
- Spread Betting On Commodities
- Binary Bets
- Spread Betting on Bonds and Interest Rates
There are a range of possible spread betting markets that one can enter into, but not all are recommended for first time or inexperienced spread bettors. It is important to have an understanding of these possible markets and their associated risks, as this will help you to avoid any costly mistakes made by many first time spread bettors.
For example, betting on some commodities such as oil or gold can be costly for those without a real understanding for the market or those new to spread betting. These commodities can be quite unpredictable and volatile over the shorter term and have been known to catch many people out. Similarly, some indices can fluctuate over a larger range than others, and to make a good profit from these while minimising your potential loss requires an understanding of how the market works and possibly having the right stop losses in place.
Spread Betting On Indices
Indices are a collection of market indexes, with a market index being itself a collection of stocks within the market used as a means to measure the overall performance of the market. Examples of some common indices include the FTSE 100, Dow Jones Industrial Average, NASDAQ, and Hang Seng.
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Spread Betting On Stocks and Shares
Financial spread betting on a share price is relatively simple. The benefits of spread betting rather than buying the shares through a more traditional method is of course a quicker turn around time than traditional share brokerage, the ability to take advantage of the leverage supplied to you by the spread betting companies, and of course the ability to bet on both a share rise, and a share fall.
More About Spread Betting On Stocks and Shares
Spread Betting On Currencies (Forex)
Spread betting on currencies, or 'Forex Trading' (Foreign Exchange Trading) as it is also known, allows you to bet on the strength of a currency against one another.
Spread Betting On Commodities
Commodities can make for a volatile market. Many complex factors control the price, from weather to war, prices fluctuate daily but with growing demand from booming economies some commodities are seeing great returns year on year. Before making a spread bet on a commodity be sure you have done your homework otherwise it could turn out to be a costly mistake.
More About Spread Betting Commodities
Binary Bets
A binary bet gives you the opportunity to bet on the performance of a financial market over a specific period of time where there are only two possible outcomes to bet on. A simple ‘Yes’ / ‘No’ or ‘Agree’ / ‘Disagree’ option will be provided with either option typically being a quoted price on whether said market will end higher or lower than stated on the specified end date of the bet.
Spread Betting on Interest Rates
Spread betting companies such as IG Index allow you to take a short-term view of a country’s interest rate by betting on it over three-month terms. For a longer-term view of interest rates, spread bets on government bonds can be taken, since the prices of bonds rise and fall with interest rates.
More About Spread Betting Bonds and Interest Rates
Which Markets Should I Bet On?
Deciding which spread betting markets to bet on may seem a little confusing at first, but it's really all down to preference. Ideally you want your chosen instrument to move as much as possible in which ever direction you have chosen (long/short), in order to reap the most financial reward. Typically, markets such as Commodities, Forex and Indices move the quickest, or are known to be the most 'Volatile'. Volatility makes for big profits, as well as big losses. These types of instruments are usually done by day traders who have the time to sit and monitor market conditions and react accordingly.
If on the other hand you are not currently intending to spread bet fulltime or have limited access to the internet during the day then spread betting on stocks and shares may be a smarter option.
It is worth noting however that most spread betting sites give you the option to create 'orders to open', allowing you to open positions in the future when your chosen instrument reaches your pre-determined level. This allows you to open bets automatically, and through the use of 'limit orders', close them automatically too.
Finally, it's important to choose a market that interests you. Learn as much as you can about your chosen market and what effects its price. Follow the market for a short while before making your first spread bet and consider opening a demo spread betting account first.