Spread Trading the FTSE 100

There’s a new player in financial trading and it’s called Financial Spread Betting. It’s a hit in the United Kingdom where it’s also regulated and licensed and most importantly – tax free!

Let’s take the FTSE – in 2011 the FTSE trading in a range with resistance at about 5,400 and support at a little below the 5,000 level. So a day trader could have traded the range with tight stops and limit orders. This would imply selling the FTSE when it reached a level near the resistance level with, say, a 100pt stop above with say, a 300pt target profit. Conversely, you could buy near the support with say, a 100pt stop below and a 300pt profit target.

Spread Betting FTSE 100 example

For instance, suppose, the FTSE 100 is trading at 5000/5001. You think the price is going to fall, so you take a short spread bet at £10 per point. Over the next two weeks, the FTSE 100 price retraces to 4950/4951, and you close your trade by selling your spread bet back at 4951. This constitues a 49-point gain in your FTSE spread trade which, when multiplied by your £10 stake factor nets you a £490 tax-free profit*. Obvously, if the FTSE had risen by 49 points instead, you would be looking at a loss of an equivalent amount.

Trading the FTSE using a Spread Bet versus a Futures Contract

Let’s assume that one morning before the markets have opened for business we decide to open a down bet on the FTSE. We could either do this by opening a position on the futures market or we could do it with a spreadbet.

The FTSE is currently being quoted at 5523 to Sell and 5524 to Buy

We sell the FTSE 100 for £100 a point at 5523.

After a few hours the FTSE index is trading at 5250.

We close our position netting us [(5523 – 5250) x 100] = £27,300

This £27,300 would be free of any taxes whatsoever [no CGT or Stamp Duty….]

We do the same trade using a futures contract – again we make £27,300 but now we have to pay CGT at a rate of at least 18% (if not 28% or more!) assuming we have used up the tax free allowance for the year (but no stamp duty as we have bought a contract as opposed to securities)

So £27,300 -18% = £22,386

So you would have been £4,914 better off executing the above deal on Spread Betting versus Futures.

Of course what really matters is that we have to look at our net profit over a set period of time and transaction costs do add up over the long run.

Transaction costs also have to be considered as these do add up over the long run.  For instance, when trading futures intraday, day trading margins and transaction costs are low.  In this instance spread betting might be more suited for longer term trading since then the transaction costs aren’t so important due to bigger expected wins/losses.

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Financial Spread Betting enables the gambler to place bet on financial products such as commodities (oil, gas, silver, gold, wheat, metal and so on), stocks shares and currencies as well as the spread FTSE 100 which is the London stock exchange among other stock exchanges around the world.

There’s a major risk involved in financial spread betting whereas this type of bet uses leverage so the initial investment might seem low but in case the gambler lose the bet he might lose more than expected in case he won’t use stop loss which limits the potential loss to a certain pre determined amount set by the gambler.

Specifically the Spread FTSE 100 is very attractive to UK gamblers who are familiar with the FTSE and since it doesn’t require a whole lot of money to make money with financial spread betting, many spread bettors are placing their bets on the FTSE when betting on financial spreads.

If you’re interested in getting started with financial spread betting and specifically spread FTSE you can read your local newspaper and learn about the different stocks offered, you can also get updated with the latest tips and news and inside information about FTSE 100 and other stocks and get started placing your first bet.

The FTSE 100 is very attractive being one of the powerful financial markets in the world. Even in the times of financial crisis the FTSE has proven to be strong which made it attractive for investors.

You can find some spread betting tips news and advice as well as spread FTSE 100 here on the Financial Spread Betting Portal.

The FTSE (pronounced footsie) is London’s stock exchange market. In order to invest in the FTSE you usually need a large amount of money in order to make a large profit. Not anymore. Financial spread betting enables spread FTSE bets which allows to actually place bets on the FTSE.

You can bet on the FTSE 100 (100 top traded companies in the London stock exchange market), you can bet on specific stocks or shares, but the main idea is that you can start with as low as 10 pounds on your bets and you can leverage your bet so that the winning amount can be higher than the one you would get by actually investing a huge amount in the FTSE. Financial spread betting is gaining popularity in the United Kingdom and the fact you can now bet on spread ftse makes it even more attractive to the UK gamblers and financial investors.

Betting on spreads was widely common in sports betting, in the UK specifically on horse racing mainly, and now that it became available in the financial markets, some say it is going to be even bigger than forex. It is known that in the UK alone, there are already millions of financial spread betting gamblers and this number is rising by the day as more and more companies enter the financial spread betting market.

In financial spread betting you can virtually bet on anything including commodities such as gas sugar oil, gold, silver, forex and more and now that you can place bets on the FTSE it makes it attractive to non investor who would like to try out the financial marketplace without the risk of a lot of money which is usually involved in investing money.

The spread ftse bets are popular in the UK regardless of the fact you can bet on other markets such as the German Bursa or even the US stock market. The reason for that is that most British gamblers are familiar with the FTSE and what it has to offer and that is why they already know what they are going to bet of even before they intend to place the bet.

You can bet on financial spreads and especially spread ftse in any company offering financial spread betting. Now it’s the chance to take advantage of the special offers and bonuses offered by the financial spread betting companies and get started with financial spread ftse betting.