About Financial spread betting

Financial spread betting

Financial spread betting is a type of derivative product that allows you to trade on the price movements of the financial markets, whether they rise or fall, and has become increasingly popular in recent years.

Trade tax free

In the UK, all profits gained from financial spread betting are completely tax free*. All profits are exempt from capital gains tax, income tax and stamp duty.

Trade long and short

Spread betting gives you the flexibility to speculate on whether you think the market will rise or fall. If you think the market will rise you can “buy” and if you think a market will fall, you can “sell”, allowing you to profit in both directions. Of course, if you’re incorrect, then you will incur a loss which could exceed your initial deposit.

Trade on margin

Financial spread betting is a leveraged product, allowing you to deposit only a percentage of the overall value of your trade, freeing up your capital elsewhere. This percentage amount is referred to as margin. With Alpari (UK), the margin required starts from 0.2% of the total value of your position.

Spread betting explained

Current GBPUSD price 1.6000-1.6002

You believe that GBPUSD will go up, so you buy £1 per point at the current price of 1.6002. If the price moves higher by five points to 1.6007 and you were to close your trade at this price, you would make £5 profit (a five-point movement at £1 per point).

However, if the price were to go down by five points to 1.5997 and you were to close your trade at this price, you would lose £5 (a five-point movement at £1 per point).