investing-in-alternative-trading

Investing In Alternative Trading

The following is a third-party contribution:

You have to face facts – the currency market is becoming more difficult for traders. The markets are battling to make money as liquidity is drying up and investors are reluctant to take risks, which amounts to quicker currency terms. Where it once took weeks and sometimes months for prices to adjust, now in 2016 it is happening very quickly, creating stress for traders.

This is why it is so important to choose your broker carefully. In forex trading, for instance, there are a host of issues that confront traders. A trader therefore wants their broker to have a responsive customer service department – those who will attend to your requests promptly.

The Potential to Make Profit with Falling Market Prices

With spread betting you want answers and CMC Markets, a UK-based financial derivatives dealer, offers online trading in spread betting, a tax-efficient way of leveraging the financial markets. CMC Markets will predict where a price of anything will stand at a specified time in the future. The prediction is in the form of a spread which is the range between low and high estimates. The trader than bets on those prices, buying at the high price if they believe the price will rise from current levels and selling at the low price if they believe it will fall.

Spread-betting profits aren’t liable for capital gains tax, but spread-betting losses can’t be set against other gains to reduce tax.

A financial spread bet is known as a derivative – it isn’t regarded as live share. Traders can take a position against the value of an underlying financial instrument moving down- or upwards in the market place. With spread betting, the trader doesn’t actually own the stock they are betting on – they simply speculate on the direction that the spread of the price of that stock will move.

Trade on Wide Range of Markets

The advantage in this is that the trader can also make money on a stock that goes down. With spread betting, apart from stocks and shares, there are other money market instruments like currencies, indices, gold, oil etc that have spreads to bet on.

The main benefit is being able to bet on things going down – to make money during the good and the bad times. Spread betting offers leverage or margin so that when placing a bet, you don’t have to put down the full value of the bet – you only have to put down a fraction of the total value of the transaction. What this does is it frees up the rest of your money to spend as you wish elsewhere. You can therefore have many bets placed at the same time, as opposed to having all your money put on one single action. Spread betting allows for potentially greater gains.

You can make a bet without taking down the full value of the position. Your funds are not tied up in one trade, and you can use the rest for other investments. Some other benefits of spread betting are:

  • spread bets are designed for short-term trading. They gave advantages over normal dealing such as the ability to trade on margin and the ability to go short.
  • no fees or commissions
  • thousands of markets to trade online
  • 24 hours dealing
  • mobile trading – apps give you an advantage to trade from anywhere.
  • spread betting providers are regulated
  • limit your losses – a risk management system means you’re able to manage your account easily. The simple order functionality means that limiting losses and maximising returns is as easy as ever

Spread bets are a simple but effective way to invest in financial markets. It is particularly attractive for those investors who don’t have pots of risk-capital available. Its advantage lies in that fact that it offers trades a stake in a larger number of shares, meaning the gains can be far higher than if they just bought the actual shares.

Get Going – without Large amounts of Money

If you’re new to trading and still getting into trading, spread betting is a great way of gaining trading experience. This is one of the huge benefits of spread betting for beginners – simply it doesn’t require you to bet with large amounts of money.