Why Is Financial Spread Betting So Popular?

Many years ago the world financial markets were very simple and basic. Commodities and currencies were all physical and trading was carried out by merchants in real market places. But in the past few years the global economy has shifted dramatically due to the growing use of technology in general and internet especially.

In today’s world all you need in order to trade in the financial markets is a computer with an internet connection and sometimes just a cell phone and you can make trades of millions of dollars with a click of a button.

The first financial markets to allow regular retail traders were the stock markets. People started investing in stocks and some even took it a step forward and became day traders, speculating on price movements to make quick cash. After that came the forex market which allowed traders to trade using a leverage of even 1:200 that allowed them to make even more money faster. Different financial markets were “opened to the public” and soon enough everybody started looking for the next big thing. Lately it seems as if they found it. It’s called financial spread betting and it is taking the retail market with a storm!

Financial spread betting is different than regular stock trading because whereas in stock trading you buy an actual asset that you can then hold or sell, in spread betting you just bet on the rate at a given time and you make money when the rates go in your favor. So why is it considered better than stock trading? Let’s take the following example:
Imagine you hear some news about a new Google product or service that you think will bring them huge profits. It will obviously effect their stock price dramatically, so you want to make money off this exciting news. The only problem is, the stock price is currently at about $866 per share which is very expensive. If you choose to buy the actual stock you will have to spend a lot of money but if you will take the financial spread betting route you will be able to cash on this price change with a lot less money, as you will not own the actual stock but just bet on the stock rate.

This is just one example showing the benefits of financial spread betting but there are some more that maybe we will discuss in future posts.