Financial spread betting, as well as stock trading is related to shares and their prices. But that is where the similarity ends. In fact, there are a lot of differences between stock trading and financial spread betting.
Taxes
There are no taxes on the profits gained through. This is because there isn't actual exchange of shares between the company and the one who speculates. It is just a contract and FSA considers it to be a form of gambling. Unlike short selling of shares, financial eliminates the risk as one only has to guess the rise and fall of share prices rather than try to buy and sell them.
Scope of revenue
You can invest your money by buying stock of whichever company you prefer. In the long run how you earn money is when the prices of the stocks that you have bought have risen, so that you could sell them at a profit. There is no limit to how many different companies' stock you can buy. However, with, the companies usually take bets only on the stock market indices. So if the index goes in accordance with your prediction you earn money. But if the index goes against your prediction then you lose money. But overall, the scope for earning revenues is limited in spread betting.
Who makes the rules?
There are always regulators who make the rules when it comes to stock trading. So, the rules are pretty much fixed for everyone and one can feel safe about the fact that there is a higher authority which will try its best to ensure that there aren't any scams and it is a level playing field for all the investors. In fact, even buying and selling patterns are constantly monitored to ensure that no one is trying to rig the stock market prices in order to make an unfair profit.
On the other hand financial companies are profit making organisations and they are not very different from the casinos. Therefore you could be in for a surprise due to some rules. Hence you always need to watch your back when you are involved in financial. As they say in gambling, the house always wins. So you have to be absolutely sure about what you are wagering on as you would be doing so on the outcome as well as payoff. How much you earn would therefore depend on how accurately you have wagered on the financial instruments.
Costs
The immediate costs of financial are seeming to be less. This is because for stock trading, you have to pay a commission to the broker. On the other hand, in the longer run the cost of funding for becomes equal to the taxes that are paid for stock investment and the brokerage. These charges usually are covered in the spread bets initially, but your deposits could grow too, if you have a long position for several weeks.
For greater insight into what Financial Spread Betting is and whether it suits your appetite for risk and winning, you can visit http://spreadcompare.co.uk
Article Source: http://EzineArticles.com/?expert=Terro_White
No comments:
Post a Comment