Investors understand that all types of investing have risks, but some are riskier than others. Spread betting is less risky and easier to control than day trading. This is evident when comparing spread betting and day trading.
Day trading involves the purchase of shares by an investor who will either hold onto the shares or sell them in the future. The stock exchange sets the rate for the price of shares and so in order to make money, the trader must wait for the price of the shares to be higher than the purchase price.
Spread betting doesn’t involve any purchase of shares, but places a bet on the price of the share. This means the trader looks at a spread from a spread betting firm and speculates which way the market price will move in relation to the spread.
Since the day trader must wait for the price of the share to reach a certain point before a profit is made, the trader is at the mercy of the market. A spread betting investor may close a bet at any time and doesn’t have to wait on the market price. Therefore, spread betting offers more control over the length of the bet and the amount of profits one receives.