Betting on the spread in forex terms is similar to buying low and selling high in stock trading. The difference in forex spread betting is that traders or “spread betters” bet on currency price fluctuations within foreign exchange markets. The market movements and currency price changes of indices, currency pairs, oil and commodities provide opportunities on a daily basis to trade on the spread.
Benefits of forex spread betting via reputable forex platforms
Trading platforms and systems enable forex traders to set up accounts for spread betting. In the UK and Ireland, these accounts may have tax-free status so that profits earned are free of stamp duty and capital gains tax. Traders using such accounts are required to be resident within the country of account operation.
Forex systems offer hedging on a spread bet through trading in an underlying market. Whether the result of the spread bet is a gain or loss, the forex system remains unaffected allowing for secure and conflict-free trading. Trading executions through reputable forex platforms are fair and transparent because other dealers cannot intervene in the spread betting, hedging and trading process; nor can brokers trade against clients or re-quote.
Certain forex platforms offer spread betters greater leverage and flexibility, particularly on minimum trading size. Forex systems that hedge spread betters’ positions with banks or liquidity providers protect non-hedged bets so that the spread better does not lose their money. Forex platforms may also offer margin tracking and limit loss risk to account amounts.