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LIVERPOOL V ARSENAL BETTING PREVIEW
No Commissions Spread betting companies make money through the spread they offer. There is no separate commission charge which makes it easier for investors to monitor trading costs and work out their position size. Tax Benefits Spread betting is considered gambling in some tax jurisdictions, and subsequently, any realized gains may be taxable as winnings and not capital gains or income. Investors who exercise spread betting should keep records and seek the advice of an accountant before completing their taxes.
Because taxation on winnings in some countries is far less than that on capital gains or trading income, spread betting can be quite tax-efficient, depending on one's location. Wide Spreads During periods of volatility, spread betting firms may widen their spreads. This can trigger stop-loss orders and increase trading costs. Investors should be wary about placing orders immediately before company earnings announcements and economic reports. Spread Betting vs. CFDs Many spread betting platforms will also offer trading in contracts for difference CFDs , which are a similar type of contract.
CFDs are derivative contracts where traders can bet on short-term price moves. There is no delivery of physical goods or securities with CFDs, but the contract itself has transferrable value while it is in force. The CFD is thus a tradable security established between a client and the broker, who are exchanging the difference in the initial price of the trade and its value when the trade is unwound or reversed. Although CFDs allow investors to trade the price movements of futures, they are not futures contracts by themselves.
CFDs do not have expiration dates containing preset prices but trade like other securities with buy and sell prices. Spread bets, on the other hand, do have fixed expiration dates when the bet is first placed. CFD trading also requires that commissions and transaction fees be paid up-front to the provider; in contrast, spread betting companies do not take fees or commissions.
When the contract is closed and profits or losses are realized, the investor is either owed money or owes money to the trading company. If profits are realized, the CFD trader will net the profit of the closing position , minus the opening position and fees. Profits for spread bets will be the change in basis points multiplied by the dollar amount negotiated in the initial bet. Both CFDs and spread bets are subject to dividend payouts assuming a long position contract. While there is no direct ownership of the asset, a provider and spread betting company will pay dividends if the underlying asset does as well.
When profits are realized for CFD trades, the investor is subject to capital gains tax while spread betting profits are usually tax-free. Spread betting is a way to bet on the change in the price of some security, index, or asset without actually owning the underlying instrument. Is Spread Betting Gambling?
While spread betting can be used to speculate with leverage, it can also be used to hedge existing positions or make informed directional trades. As a result, many who participate prefer the term spread trading. From a regulatory and tax standpoint it may be considered a form of gambling in certain jurisdictions, since no actual position is taken in the underlying instrument.
The majority of U. As a result, spread betting is largely a non-U. It cetainly does not come from problem's situation. The problem's situation begins by explaining that I am laying a bet when the price is Then, I thought, any losses or gains must be counted from this price and not from any possible interim prices, which the shares might have gone through between the start and the end of the bet.
Only the start and the end prices must matter. The start price is , the end price is Where does come from and why it is used in the calculation of the losses, which I need to cover? Why not use the starting price of ? After all, I layed my bet when the price was and this is the price against which any gains or losses must be calculated after the bet ends. Once again, this is a genuine question. Plamka talk , 9 April UTC Reply [ reply ] Yes, of course you're right that the final figure should be taken from p not p!
The bettor will receive that amount. Thus we have the prospect of the same gains and losses as those of a shareholder with shares. For this reason, if a dividend of This seems to me to be logical, since in a liquid market the price of the shares will fall immediately after the payment of the dividend with an amount equal to the value of the dividend, i. Am I right? I am only an amateur and this is a genuine question. If I am right, then I suggest that the example is edited to clarify this with something along these lines: For example, suppose Lloyds TSB goes ex-dividend with dividend of The bettor will receive the amount of the dividend multiplied by the value of bet expressed in pennies.
Should this article be divided into separate articles or sections for each nation? Do any nations simply "track" a major sports betting locale such as the US, UK or other nations? I'm not sure how to change it myself, although I'll try to get round to learning it soon if no-one corrects it. Perhaps more importantly, the 'source' for the Mike Ashley reference is an article full of "it was reported" and "it is alleged" and "according to sources".
Is this sufficient basis for establishment of fact? I'm not disputing it happened, but was expecting to see, I don't know, a bit more in the way of attributable facts I guess. It sounds to me like the difference is only that the for spread betting, you don't need to have the whole value of the stock ready in your account, and rather than pay a trading commission, fees are payed based on how long a bet is open, and a stop loss order or stop gain order is guaranteed to execute at the exact price specified.
Is that the whole difference? I notice I've just come across this wikipedia article that it is claimed in the main article that "Most traders are also not liable for Income Tax unless they rely solely on their profits from financial spread betting to support themselves.
I didn't at this stage want to change the main page in relation to this point, as it's an important one, so am posting something here in case anyone can come up with a clear reason why the current posting isn't incorrect e.
My view is that the main entry should be altered so that this statement is only true in certain jurisdictions e. I believe it applies in Australia , but doesn't apply to spread-bettors resident in the UK. Feel free to open a discussion?
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What Is A Spread Bet? - Sports Betting 101 at FanDuel SportsbookCan recommend. national television awards betting odds with
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The start price is , the end price is Where does come from and why it is used in the calculation of the losses, which I need to cover? Why not use the starting price of ? After all, I layed my bet when the price was and this is the price against which any gains or losses must be calculated after the bet ends.
Once again, this is a genuine question. Plamka talk , 9 April UTC Reply [ reply ] Yes, of course you're right that the final figure should be taken from p not p! The bettor will receive that amount. Thus we have the prospect of the same gains and losses as those of a shareholder with shares. For this reason, if a dividend of This seems to me to be logical, since in a liquid market the price of the shares will fall immediately after the payment of the dividend with an amount equal to the value of the dividend, i.
Am I right? I am only an amateur and this is a genuine question. If I am right, then I suggest that the example is edited to clarify this with something along these lines: For example, suppose Lloyds TSB goes ex-dividend with dividend of The bettor will receive the amount of the dividend multiplied by the value of bet expressed in pennies. Should this article be divided into separate articles or sections for each nation?
Do any nations simply "track" a major sports betting locale such as the US, UK or other nations? I'm not sure how to change it myself, although I'll try to get round to learning it soon if no-one corrects it. Perhaps more importantly, the 'source' for the Mike Ashley reference is an article full of "it was reported" and "it is alleged" and "according to sources".
Is this sufficient basis for establishment of fact? I'm not disputing it happened, but was expecting to see, I don't know, a bit more in the way of attributable facts I guess. It sounds to me like the difference is only that the for spread betting, you don't need to have the whole value of the stock ready in your account, and rather than pay a trading commission, fees are payed based on how long a bet is open, and a stop loss order or stop gain order is guaranteed to execute at the exact price specified.
Is that the whole difference? I notice I've just come across this wikipedia article that it is claimed in the main article that "Most traders are also not liable for Income Tax unless they rely solely on their profits from financial spread betting to support themselves.
I didn't at this stage want to change the main page in relation to this point, as it's an important one, so am posting something here in case anyone can come up with a clear reason why the current posting isn't incorrect e. My view is that the main entry should be altered so that this statement is only true in certain jurisdictions e. I believe it applies in Australia , but doesn't apply to spread-bettors resident in the UK.
Feel free to open a discussion? There's not much to discuss here, as we shouldn't have any links that promote anything, whether they promote one company or more than one. Phil Bridger talk , 23 January UTC Reply [ reply ] I've searched for the Wikipedia rule on External links and it says: Some acceptable links include those that contain further research that is accurate and on-topic, information that could not be added to the article for reasons such as copyright or amount of detail" I think this applies to that website in this case.
If you feel there are more appropriate links then please add them, but I still feel that this link was appropriate based on the guideline I quoted. It contains some adverts but it hardly qualifies as being spam. A Stock Market Trade Versus a Spread Bet Let's use a practical example to illustrate the pros and cons of this derivative market and the mechanics of placing a bet.
First, we'll take an example in the stock market, and then we'll look at an equivalent spread bet. Note here several important points. Also, normally commissions would be charged to enter and exit the stock market trade. Finally, the profit may be subject to capital gains tax and stamp duty. Now, let's look at a comparable spread bet. In making this spread bet, the next step is to decide what amount to commit per "point," the variable that reflects the price move.
The value of a point can vary. In this case, we will assume that one point equals a one pence change, up or down, in the Vodaphone share price. In the U. However, while spread bettors do not pay commissions, they may suffer from the bid-offer spread, which may be substantially wider than the spread in other markets. Keep in mind also that the bettor has to overcome the spread just to break even on a trade.
Generally, the more popular the security traded, the tighter the spread, lowering the entry cost. In addition to the absence of commissions and taxes, the other major benefit of spread betting is that the required capital outlay is dramatically lower. The use of leverage works both ways, of course, and herein lies the danger of spread betting. As the market moves in your favor, higher returns will be realized; on the other hand, as the market moves against you, you will incur greater losses.
While you can quickly make a large amount of money on a relatively small deposit, you can lose it just as fast. If the price of Vodaphone fell in the above example, the bettor may eventually have been asked to increase the deposit or even have had the position closed out automatically. In such a situation, stock market traders have the advantage of being able to wait out a down move in the market, if they still believe the price is eventually heading higher. Managing Risk in Spread Betting Despite the risk that comes with the use of high leverage, spread betting offers effective tools to limit losses.
Standard stop-loss orders: Stop-loss orders reduce risk by automatically closing out a losing trade once a market passes a set price level. In the case of a standard stop-loss, the order will close out your trade at the best available price once the set stop value has been reached. It's possible that your trade can be closed out at a worse level than that of the stop trigger, especially when the market is in a state of high volatility. Guaranteed stop-loss orders: This form of stop-loss order guarantees to close your trade at the exact value you have set, regardless of the underlying market conditions.
However, this form of downside insurance is not free. Guaranteed stop-loss orders typically incur an additional charge from your broker. Risk can also be mitigated by the use of arbitrage, betting two ways simultaneously. Spread Betting Arbitrage Arbitrage opportunities arise when the prices of identical financial instruments vary in different markets or among different companies. As a result, the financial instrument can be bought low and sold high simultaneously. An arbitrage transaction takes advantage of these market inefficiencies to gain risk-free returns.
Due to widespread access to information and increased communication, opportunities for arbitrage in spread betting and other financial instruments have been limited.
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