Buy Shares Online or Spread Bet - Which is Right for You?

LONDON, January 25, 2011 /PRNewswire-FirstCall/ -- Buying shares is the traditional way to speculate on movements in the financial markets (http://www.cityindex.co.uk/range-of-markets/). If there was a company you were expecting to do well, either because you had been following trends in the industry, or simply because you like the product or service they are offering, you would buy shares in the company. In the past, you would do this by phoning your stockbroker, or more recently by logging on to your trading account, and asking to purchase an amount of stock in the company. Once the stock had made a desired profit, or was losing you money, you would sell it on to someone else.

Spread betting is a different beast. You do not phone a stockbroker, you do not own the underlying shares and you do not have to buy, it is just as easy to sell a market you think is going down. In addition, you do not currently have to pay tax or stamp duty on your spread betting returns.*

So how does it work? Rather than buying shares directly, you speculate on whether you think those shares will rise or fall. It is all done at the touch of a button in your spread betting trading platform ( http://www.cityindex.co.uk/trading-platform/).

Spread betting does not limit you to stocks and shares in individual companies. You can spread bet on stocks, commodities, currency pairs and many other markets. Many spread betting providers, such as City Index (http://www.cityindex.co.uk/), also offer CFD trading as an alternative method of financial trading.

Some people wonder if not owning any part of a company puts them at a disadvantage. In theory, owning a company's stock allows you some say in how that company is run. In practice however, you need to own a great deal of stock to have any sort of voice in the company. Spread betting also allows you to be involved with financial trading with much less money than if you buy and sell shares. This is because spread betting is a leveraged product. Simply put, this means you are able to take positions in excess of your initial stake, exposing you to a much larger profit potential. Be warned however that the reverse is also true, and you could lose a greater amount than your initial deposit.

If you want to take your financial spread betting knowledge further, consider attending a City Index Spread Betting seminar:

(http://www.cityindex.co.uk/learn-to-trade/seminars.aspx.)

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, contracts for differences (CFDs) and, in the UK, spread betting (http://www.cityindex.co.uk/spread-betting/).

We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support.

Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

* Spread betting and CFD trading are exempt from UK stamp duty. Spread betting is also exempt from UK Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.

SOURCE City Index