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What is spread betting Forex?
Spread betting Forex is a tax efficient way of trading and investing in currency moves without making any transaction directly within the Forex markets. By placing a spread bet, you are speculating on the move of the underlying market but without actual ownership, or physical exchange. The bet is a transaction between the trader and the broker.
What are the three main components of spread betting Forex?
This first component is the spread. Broker quotes have two prices, the bid and the offer. If you are looking to sell the underlying asset, you would trade at the bid. Buying the asset, and you trade at the offer. The difference between the two prices is known as the ‘spread’.
The second component is the direction of the trade. Buying or going long if you think the price will rise. Selling or going short if you think the price will fall.
The third component is the size of the bet. The trade size is placed per pip. For example, I buy EUR/USD at the offer of 1.2010 in £2 per pip. The price moves higher, and we close the trade at the bid price of 1.2030. We would have made £40. That is a 20 pip move in £2 per pip (20 x 2 = 40).
Figure 1 spread betting with Pepperstone
What are the benefits of spread betting Forex with Pepperstone?
There are numerous benefits to spread betting Forex through Pepperstone. We offer consistently competitive spreads, potentially reducing your cost to trade. You have peace of mind trading through a regulated broker. Your profits can be tax free depending on your individual circumstances.
We also offer automated trading, for those wanting to build and run their own Expert Advisor (EA).
For more information on spread betting forex through Pepperstone, click on this link.
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