Many UK residents have discovered the world of spread betting and it has made many citizens significant profits. Financial spread betting is a type of spread betting which focuses on the financial instruments found on the stock exchanges. These financial instruments include bonds, stocks, commodities, indices, and forex markets. Although these instruments are involved in spread betting, financial spread betting doesn’t really take part on the stock exchange.
Spread betting firms offer spreads on individual markets, and financial spread betting involves a bet being placed on this spread. No purchase of an instrument ever takes place and it is normally on the stock exchange where one would execute these purchases. Instead in financial spread betting, a trader will contact the spread betting company and place a wager on the spread. The trader will determine which direction the price of the financial instrument will move and make an appropriate buy or sell bet.
All aspects of financial spread betting are handled through the spread betting firm because no instruments are really being purchased. The spread betting firm takes the money wagered, collects losses as necessary, and deposits any profits. Therefore, in financial spread betting a trader is dealing only with the spread betting firm.