Learn to be a Financial Hunter - Not the Hunted
|
|

..CFDs

|

..Options.

|
You Are Here: Home > Stockmarket & Trading > Spread Betting Section > FAQ : Question & answer
Why the Spread Bet price differs

from the underlying cash price

FREE Guide: How to learn spread betting and prosper. If you're new to Spread Betting this free guide will get you building some solid foundations. Download
The price differential refers to what's called the cost of carry.

If you buy £10,000 of Barclays using a traditional stockbroker you would have to pay the full amount in cash. But if you bought the equivalent sized position using a spread bet you would be required to only pay a deposit of say 10% or £1,000, see - How 'Margin' works

Assume you had £10,000 and bought the position using spread bets putting up a deposit of just £1,000. The balance of £9,000 would be left in your deposit account earning interest. And it is this interest payment that is the cost of carry.

So the price differential of the spread bet market versus the cash market takes the cost of carry into account so in effect there's neither an advantage nor disadvantage to buying a security either way.
WARNING! - Spread Bet Broker Advice



There are good spread bet brokers and there are bad ones.

Having a good broker won't guarantee you profits but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.

So who do I recommend?

Simple, the 2 brokers I personally use for my own spread betting (and I've used them for years) -

FREE Report : How to Learn Spread Betting and Prosper
How to build the all-important trading experience
Where to get trading help and advice
Which broker to use and why
Simple 2 month training plan to follow
Download the FREE report
[an error occurred while processing this directive]


© 2017 LearnMoney.co.uk All rights reserved

The information on the LearnMoney.co.uk website has been compiled from sources believed to be reliable, but is not warranted to be accurate or complete.
All recommendations and comments are provided for general interest only and should not be construed as advice.
Professional advice should always be sought before buying or investing in any financial product.
The price of securities and any income from them can go down as well as up.
Past performance of a security or market is not necessarily indicative of future trends.
Any opinions and recommendations on LearnMoney.co.uk are given in good faith, but without legal responsibility and are subject to change without notice
.