Spread Betting Guide to Trading on Indices for Beginners
LONDON, April 24, 2012/PRNewswire/ --
Spread betting with City Index [http://www.cityindex.co.uk ] enables investors the
flexibility of going short and selling markets, enabling them to potentially profit from
markets as the fall, as well as going long and potentially profit from rising markets as
well. In the following easy-to-follow guide, beginners can learn how they can go short and
sell on a trade with a spread betting account.
Spread Betting with City Index
Investors choosing to spread bet with City Index can benefit from:
- No Capital Gains Tax or Stamp Duty*
- Ability to go long and short on a market
- Access to over 12,000 financial markets
- Easy access through its high leverage feature
- Leveraged trading
At present in the UK, investors can benefit from paying no Capital Gains Tax (CGT) or
Stamp Duty on profits made through their spread betting account. However, this is subject
to change and investors should seek independent advice if necessary.
As mentioned above, the initial deposit for accessing these markets is only small;
with City Index, investors are required to pay typically between 1% and 10% of the
underlying market's total value, allowing easy access into the world of trading for many
new and part-time traders.
Commission free trading
There is no commission charged for each of your spread bets. However as the name
suggests, there is a widened spread, which is one of the chief costs of placing the spread
Subsequently, you decide to go long and open a buy position of GBP10 per point at
Over the coming days, the release of some positive US economic data causes the the
Wall Street Index to rally, resulting in City Index's latest price for the Wall Street DFT
to be 12808/12809 (sell price/buy price).
At this point you decide to cash in your gains. You do this by selling GBP10 per point
at 12808 (the City Index sell price show above).
Therefore, you net a tax-free profit* of GBP160. This is because you bought at 12792
and sold at 12808 with a stake size of GBP10 per-point. The market moved in your favour
16-points, which multiplied by your stake size of GBP10 per point, nets you a profit of
GBP160, i.e. (12808-12792) x GBP10 = GBP160.
Alternatively, had the market moved against your buy position and the Wall Street
Index has in fact fallen 16-points to 10776; you would have incurred a loss of GBP160,
Spread Betting Risk
As a leveraged product, the potential for profits and losses from an initial capital
outlay are significantly higher than in more conventional forms of trading when spread
betting on the financial markets.
*Spread betting is currently exempt from UK stamp duty and Capital Gains Tax. Tax laws
are subject to change and depend on individual circumstances. Please seek independent
advice if necessary.
About City Index:
Today more and more individual traders are discovering the benefits of derivatives,
and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50
countries. We provide access to a wide range of instruments including margined foreign
exchange, CFDs and, in the UK, financial spread betting [http://www.cityindex.co.uk ].
We constantly look to improve the performance of our platforms and expand our range of
services. The result is our customers benefit from innovative trading tools with
transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk for details.
Source: City Index
Joshua Raymond, City Index, +44(0)20-7107-7002, email@example.com