Trading the FX, Shares and Commodities Markets
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As the major economies start to stabilise and the risk of a depression fades into the distance many are reflecting on a few important points. Firstly, how did it all happen? Secondly, how can they better protect themselves in the future?
If we were to be honest with ourselves, then we should probably accept that we can improve on at least a couple of the following:
- Tax efficient investments
- Long term investments
- Actively reviewing our existing invests, and
- Looking at new opportunities that the financial markets are currently providing
Of course, not everyone is sitting on their hands. Many actively trade stocks and shares. Whilst others regularly review their banking and mortgage arrangements.
A more common form of trading that people are turning to is spread trading or spread betting. It offers a good number of benefits compared to traditional share trading and the ease of access, speed and number of trading opportunities make it an attractive option.
Before we proceed though, it should be pointed out that, as with all forms of investment, there is a downside and you can lose more than your initial stake. So why spread bet?
Put simply, there are many advantages.
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One key advantage is the wide range of financial markets on offer including forex, shares and commodities. You can trade the Euro/Dollar, you can trade US, European and UK shares you can trade both Oil and Gold.
Note also that, as spread betting does not involve the transfer of ownership rights and it is simply a bet, it is not liable for stamp duty, income tax or capital gains tax*.
Being able to 'short' a market provides interesting opportunities. You do not have to speculate on markets to go up. If your research suggests that the Dollar/Yen exchange rate will go down you can speculate on it to go down. If your research indicates that Crude Oil will go up you can still spread bet on it to go up.
So whilst there are a good number of positives, it is important to understand the negatives.
Spread bets carry a high level of risk to your capital, you should only speculate with funds you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment requirements. Familiarise yourself with the risks involved. Seek independent advice where necessary.
The Financial Services Authority regulates the UK spread betting firms. This helps to ensure a certain level of quality or, more importantly, client protection.
There are a number of regulated companies that offer thousands of international markets including companies like GFT and Tradefair. Naturally, they both offer the normal benefits of spread betting including; tax free trading*, trading outside market hours, no brokers fees and no commissions.
Spread Trading on FX Markets - Companies Comparison
Forex |
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| Dollar/Yen Daily |
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| Dollar/Yen Future |
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| Euro/Dollar Daily |
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| Euro/Dollar Future |
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| Euro/Sterling Daily |
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| Euro/Sterling Future |
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| Sterling/Dollar Daily |
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| Sterling/Dollar Future |
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| Sterling/Euro Daily |
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| Sterling/Euro Future |
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| Other Forex |
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The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
For more details on trading foreign exchange rates see Forex Spread Betting.
Spread Trading on Shares Markets - Companies Comparison
Shares |
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| FTSE 100 Shares |
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| FTSE 250 Shares |
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| Wall Street Shares |
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| S&P 500 Shares |
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| Nasdaq 100 Shares |
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| DAX 30 Shares |
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| CAC 40 Shares |
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| Irish Shares |
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| Other Shares |
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The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
For more details on trading equities see Spread Betting on Shares.
"Trading the FX, Shares and Commodities Markets" last update by R Thomas, 14-Jan-2010
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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