Financial spread betting explained :The Three Minute Spread Trading Manual

What is Spread Betting?

Spread betting provides an opportunity to profit from an increase or decrease in share prices as quoted on the World’s stock markets. Other  financial instruments, such as currencies or commodities, may also be dealt. It is not necessary to actually buy the shares or other instrument.

How does it work?

To answer this question, it is best to use an example, such as a spread betting online on the price of a share. You research the share price of a company that you are interested in, e.g. Bank of Ireland. You will have an opinion that the share price will either increase or decrease in the future. If you think the price will go up you "buy" the share price. If you think the price will go down you "sell" the share price. If your opinion is correct, you will make a profit, but if your opinion is incorrect, you will make a loss.

How do I calculate my profit or loss?

Shares on the Irish Stock Exchange are priced in euros and cents. In spread trading, each cent is given a value. You decide what value each cent should have. Let’s assume you decide to give each cent a value of £10. Then, for every cent the share price moves up or down, you make a profit or loss of £10.

You could, of course, give each cent a value greater or less than £10. It depends on the level of risk you are prepared to take. The bigger the value given to each cent, the bigger the potential reward and the bigger the risk.

How do I commence betting?

To commence spread betting, you need to first open an account with WorldSpreads. This can be done by telephone or online and only takes a couple of minutes. You then need to deposit funds to this account. You are now ready to commence with your first bet.

Every trade carries a potential profit or loss.

The amount of funds required in your account to place a particular bet is explained on the home page of our website www.WorldSpreads.com under the heading Market Information. Alternatively, our dealers can tell you instantly how much you would need to place each trade.

Clearly, it would be possible to make a profit. Could I make a loss?

Like any investment, losses may be incurred.  However, you can take action to minimise these losses.

When recording your bet with WorldSpreads, you can state the maximum you are prepared to lose. This is called a "Stop Loss" and your position is automatically cut when you reach the loss limits you have specified.

In addition, a loss making bet can be terminated at any time, thus limiting any potential losses. You can stop the extent of the loss immediately by a phone call or by placing a 'counter' bet online. This is called "closing your position" and it is instantaneous, no waiting to contact a broker or hoping to find a buyer for your shares.

How does Spread Betting differ from investing in shares?

It differs in many ways and in each case it has major advantages over investing in shares. Here are some of the main advantages:

• You can profit from falling share prices as well as rising prices.
• You can open an account in minutes.
• You pay no commissions on your trades.
• There is no stamp duty or capital gains tax.
• All trades are executed immediately.
• You can limit the extent of any losses.
• It requires a much smaller outlay (typically 10-15%) to make the same profit as would be derived from investing in shares.
• You can protect or hedge an existing investment with a spread trade.
• There is no currency risk when trading in overseas shares denominated in other currencies.
• In addition to shares, you can trade indices, currencies, and commodities.
• You can do all your trading online or by phone.

How do I actually get started?

Five simple steps to getting started:

1. Open an account via our website www.WorldSpreads.com or by calling our Trading desk at 020 7398 5222.
2. Post or fax (020 7398 5101) or email enquiries@worldspreads.com a copy of your passport or drivers licence, as well as a copy of a utility bill (not a mobile phone bill).
3. Learn how to spread trade using the simple examples on our website.
4. Read, understand and agree to our Terms & Conditions.
5. Deposit funds via cheque, bank transfer or telephone our office to deposit via Credit\Debit Card.

Why open an account with WorldSpreads?

• Established in 2000, WorldSpreads is the first and leading spread trading company in Ireland. It is the only Irish company with a UK division, which is FSA approved, which means it must operate to the professional level of a UK stockbroker.
• It is internationally established – Ireland, UK, Spain, South Africa, Greece, Austria, Germany and Hungary
• We offer the tightest spreads in Ireland, thereby giving you the highest profits.
• We endeavour to provide a service to the highest professional standards.
• You can retain the services of a WorldSpreads Trader to provide free tutorials.
• WorldSpreads is 100% Irish owned.

Risk Warning

Spread bets are margined products; it is possible to lose more than your initial margin deposit or credit allocation as well as any variation margin that you may be required to deposit from time to time. Therefore you should only speculate with money that you can afford to lose. Spread betting may not be suitable for all customers; therefore please ensure that you fully understand the risk involved and seek independent advice if necessary and prior to entering into such transactions. When spread betting with WorldSpreads you are merely betting on the outcome of a finance instrument, sporting or political event etc. and therefore do not take delivery of any underlying instrument, nor are you entitled to any dividends payable or any other benefits related to the same. Risk disclosure notice.