subject: Financial Trading In The Uk After The Credit Crunch [print this page] As the world slowly recovers from the credit crunch and we look back at what went right and what went wrong, people are increasingly looking to take control of their finances.
Trying to be more tax efficient with your savings and investments is always a good starting point. Of course, looking at existing stocks and shares portfolios is another area to review.
I am sure we all appreciate that we could benefit from planning more. But not everyone is sitting on their hands. Many people actively pursue new investments. Others regularly review their banking and mortgage arrangements.
A more common form of trading that people are turning to is spread trading. There are downsides to all forms of investing and with spread trading you need to be careful because you can lose more than your initial investment.
If there is potential for incurring losses, why should you consider trading? Put simply, spread trading can be useful when it comes to easy access to the markets, investments with little or no tax* and the variety of risk management tools.
There are many potential benefits exist. Importantly, profits from spread betting are tax free*.
Also, the London Stock Exchange may close at 4.30 local time but with companies like FinancialSpreads you can spread bet on the FTSE 100 throughout the night. You can also trade a good number of other markets outside normal market hours.
Spread betting offers a wide range of international markets so that investors are not just limited to traditional stocks and shares. You can trade stock market index values, foreign exchange pairs, commodity prices and interest rates.
Spread betting, as with all forms of investment, does involve risk to your capital. This is can be potentially limited by the use of a Stop Loss which works as an automatic request to close a bet if your position moves against you by a set amount. Unfortunately, not all stop losses are guaranteed. However, they can still help reduce losses, particularly in volatile markets.
Where to trade? A number of spread trading firms offer the usual benefits of letting you trade thousands of international markets as well as letting you trade outside normal market hours. Companies, like GFT will also let you trade CFDs.
Yes, there are a good number of positives but you need to remember the downsides.
Spread bets carry a high level of risk to your capital so you should only speculate with money you can afford to lose. Like the adverts say, before trading, please ensure that spread betting matches your investment objectives. Make sure you familiarise yourself with the risks involved. If necessary seek independent advice.
* According to current UK tax law, this may change or differ depending on your personal circumstances.
by: Daniel Jones
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