Buying and selling stocks on the markets is one of the most popular ways to make a lot of money in a short amount of time. Doing your research into the many different types of trading available will help you decide upon the one that is right for you, such as spread betting versus trading stocks.
Are you interested in learning more about your options when it comes to trading and spread betting, as well as what the benefits and drawbacks are of each? Then continue reading to learn more.
When it comes to spread betting and trading, one of the major differences that will affect you has to do with taxation. Basically, if you make any amount of profit from trading physical shares, you will be subjected to the capital gains tax, along with the stamp duty.
On the other hand, if you were to participate in spread betting instead, you would not be subjected to these taxes and you would be able to keep all of the profits that you earn for yourself for whatever you need it for.
Just be aware that even though these are the rules today, the tax laws in the UK can change over time, so you definitely want to stay in the loop, just in case things do change.
Broker’s fees and transaction charges
When it comes to regular trading, you will likely want to hire a broker who can help you determine what trades to make in order to make the most profits. On the other hand, you can perform spread betting without any of the same transaction charges that you would typically incur during regular share trading.
However, many people who do enjoy spread betting typically look for a broker and pay the fees because these experts can help them make more money and bet appropriately for the best results. Before hiring a broker, though, read their reviews.
In spread betting, going long is the same as going short
When it comes to spread betting, you have more flexibility than traditional stock trading because you can take your position on the market whether it is falling or rising. In other words, you can make money no matter where the prices are going. So this means that you can go long and buy a market based on expectations that it will continue to increase in its value. Or you can instead go short and sell based on expectations that the market will fall in value. Basically, when it comes to spread betting, there really isn’t any difference between playing the short or the long side. On the other hand, a stock will typically fall a lot faster than it will rise, which means taking advantage of these short-term opportunities could be harder than in spread betting.
Now that you know a few of the main differences between spread betting and trading traditional stocks, you can make the choice that is right for you, your ability to take risks with your money, and your long-term financial success.