Therefore, using spread betting as a hedging tool can be useful if you believe the market to take the opposite direction to your existing market exposure. The strategy can reduce the market risk of holding a share to zero when executed correctly. However, there are other risks of spread betting and costs that investors must consider when using spread betting as a hedging tool.

Spread betting is an effective trading technique for traders that reside in the U. Spread betting can result in profits if the trade is successful.

Using leverage to increase your exposure to the financial markets means your profits and losses are magnified against the full value of your position, depending on if the market moves in your favour or in the opposite direction. Open a spread betting demo account now to practise trading. In spread betting, the spread is calculated as the difference between the buy bid and sell ask prices that are quoted for an instrument.

Options Trading on Award Winning Trading Platform | Guardian Stockbrokers UK

The bid-ask spread can fluctuate depending on the volatility and liquidity in the market. Browse our markets page to view live prices and spreads. There is a wide range of trading strategies that you can use when spread betting, and these differ for each market and instrument. Read our list of the top trading strategies. Spread betting is suitable for both beginners and experienced traders, but it is important to understand the risks before you start trading.

When learning the basics, you can use our spread betting for beginners guide.

Know your options - binary, regular, or spread bet?

Spread betting requires clients to trade using leverage, which increases your exposure to the markets. While this can increase the opportunity for profit if your trade moves in your chosen direction, if the markets move against you, your losses will be magnified based on the full trade value. It is important you understand the risks before you start spread betting and ensure you take precautionary measures, such as adding risk-management tools like guaranteed stop-loss orders. Read about how to place stop-loss orders on your positions.

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No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

See why serious traders choose CMC. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. Log in. Trade on the go Download our apps. Home Insights Learn to trade Learn spread betting Spread betting tips.

See inside our platform. Start trading Includes free demo account. Quick link to content:. List of spread betting tips. Know the risks and rewards of spread betting. The risks and advantages of spread betting make it the most popular leveraged trading product in the U. Therefore, learning about the tax efficiency of spread betting and other advantages can help realise its full potential.

Build a trading plan. Trading without a plan is like driving without knowing what direction you are going. A trading plan can be used to help to keep trades consistent, disciplined and reduces the likelihood of unplanned trades. For more information, visit our article on creating a trading plan when spread betting. Practise risk management. Use of risk management conditions such as stop-loss and take-profit orders can help manage your exposure to risk.

Focus on one market. The first question to answer here is, what exactly is spread betting? Well, spread betting is a derivative product and strategy in which you predict whether the value of an asset will rise or fall.

Why trade options with Guardian ?

Since it is a derivative, just like when you are trading CFDs, you do not actually own the underlying asset. This non-ownership of the asset itself is not necessarily a bad point since it does provide you with a great deal of flexibility to profit from the price of the asset going up or down. In spread betting, this is exactly what you will be doing. You make a prediction on the price of an asset going up, or down. If your prediction is correct, then you can profit for each point an asset gains or loses.

If your prediction is incorrect then you can also lose a set amount per point. As well as being able to predict and place spread bets on almost any type of asset from forex currency pairs , commodities, indices, cryptocurrencies , and more, you also have the option of going long or short with your spread bet. Going long in spread betting means that you predict the price of the underlying asset will rise.

If that does happen, then you will make a profit. This profit will be determined by how much the asset you have bet on does actually rise before you close the position. Going short in spread betting means that you think the asset will go down in price. If this does happen, then you will be in profit by an amount that is determined by your bet size. Your bet size in spread betting is the amount which you bet per unit on the underlying asset movement. Each asset price movement is measured in points.

So you will set a bet size per point when opening a spread bet. The minimum amount you can set will typically be determined by the broker you are spread betting with, and the asset you are opening the position on. As mentioned above, spread betting is flexible in that you can also bet on the price of an asset to drop. Using the same example. While there are a variety of different types of spread bet you can choose in terms of expiration, these are a couple of the most popular:. Daily Spread Bets: These are a popular choice for short term spread betting.

A daily spread bet will expire at the end of the day which you open it, or you can also close it prior to this time with most brokers.

A rolling daily spread bet will continue to remain open until you close it and incur things such as overnight fees along the way. Futures Spread Bets: This type of spread bet can be perfect for longer-term traders. These are based on an assets value within the futures market. These can have a delivery date several months in the future. The expiration date here will be that of the futures contract, though they can be closed earlier.

A futures spread bet also does not accumulate any overnight holding fees. Just like in other types of trading in derivative markets in particular, leverage provided by your broker can greatly increase your purchasing power. Depending on the broker you may find a leverage of or more available. Using leverage in trading does though does mean that the margin comes in to play. The margin is how much of your own money you need to hold in the account as a deposit to keep your positions open.

If your positions are losing it is possible you may receive a margin call to deposit more funds to your account. With such a large variety, you are sure to find the instruments that suit you.