Spread Betting Strategies and Taxation in the UK

efewSpread betting is undoubtedly speculation based. More and more traders are willing to take risks (but with adequate measures). As far as the strategies are concerned, a trader ought to apply one depending on the prevailing market conditions and also the ability to take risks. One of the commonly used strategies in spread betting is essentially trend trading, followed by range trading, reversal trading, and so on.

Automate your trade

According to a write-up in the Telegraph, it was found there are hundreds of thousands of traders that take up this form of betting. Their main aim is to make sure that the winning amount is definitely more than what they have lost. Also, according to this write-up in the Telegraph, there is a common notion among all newcomers in spread betting that in order to get the best results; you have to stay glued to the screens throughout the day. However, this is not right. So, what is the alternative if you don’t; want to remain glued to the screens all day? The experts are of the opinion that if bettors are able to “automate” their trades, there is no need to watch the results or be anxious all day. Regardless of whether you are opting for stop-loss orders of any kind (guaranteed or standard), if you are able to program the same, you can carry on with other activities and just know the results when betting or trading stops at the scheduled time.

For more information on how you can use the stop loss orders and which one will be appropriate for your form of trade, it is best to seek the assistance of the trading house providers or professionals.

Keep tab on important aspects

As per a kindle edition of an e-book on spread betting, the best way to trade is to try out or experiment with different financial instruments that include commodities, stocks, and currency pairs. Also important are few essential aspects that are required to be taken into account. These include the strategies employed by each trader, direction of movement of the market, overall market condition, exit as well as entry points in the market, and the type of instrument you have selected for spread betting.

Taxation on spread betting in the UK

It is a well-known fact that spread betting is considered illegal in the United States but in the UK it is regulated by the FCA. According to a piece of information in an article by Forbes, for many it is surprising why the UK does not levy any taxes on the profits earned in spread betting. In this document, the explanation stated that had the UK government imposed taxes on spread betting, it would have led to revenue loss instead of revenue gain or revenue generation. This can be explained in the following manner. This article in Forbes went on to explain that the decision of the government in the UK not to impose tax on the profits earned in spread betting is intentional. It explained that while few people/traders will win the bet, few will lose. As such, the victory of winners is offset by the loss of others.

Another important aspect of the taxation system in the UK is that if tax is charged on income and profits, a parallel (or equal) allowance must also prevail for the losses incurred. As such, imposing taxes on earnings from spread betting would also mean that an active working system for credits/allowances should also exist in parallel manner.

In other words and to simplify the concept, if an individual trader wins or a group of people win in spread betting, it means that another trader or individual or group must have lost, which allowed the other trader to win. So, tax credits gained would be same as tax imposed and the result would be zero.

An incentive for spread bettors

Having said about the taxation matter above, it won’t be wrong to say that the fact that the government in the UK does not impose tax on earnings from spread betting is also one of the major reasons why more and more traders have opted for betting. Apart from the fact that this form of trading yields immense profits if you are able to speculate rightly, it also requires very little investment in the initial stages. Moreover, you are being able to trade the securities without owing them, which by itself is a major attraction for the spread bettors.

Expert guidance

With the guidance of an expert and a professional that has operated in this market for many years, you can derive some knowledge and get started with spread betting. Just make sure that the broker you select does not take you for a ride. For this approaching, a reputed trading house is perhaps your best bet.

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