What is spread trading?

Question

What is spread trading?

Answer 1

Day trading, otherwise known as spread trading, allows you to speculate on the global stock market, property futures, indices, commodities and currencies. You can trade from anywhere in the world that has an Internet connection, as many financial bookmakers now have online dealing platforms. In fact, in most cases you can trade 24 hours a day.

Answer 2

Same as spread betting?

Basically betting on the price movement rather than buying the shares.

So if the share price is 100-105 you bet so many pounds a point. So buy bet at £1 a point. You start at 105 (loss £5), if share price goes to 110-120 you have made 110-105 x £1=£5

Advantages: No stamp duty, no commission, no Capital gains Tax on profits. UK stocks cand be dealt out of UK hours (up to 21.00 Wall Street close)

Just needs margin (say 10%)

Disadvantage. Spread not the same as the market (wider), may not move relative to share price due to supply/demand.

Gearing may enable you to over-invest and multiply risk.

See http://www.shareworld.co.uk for Q & A

Answer 3

Basically spreads are traders being creative.  They are what you get when you combine options.  There are a few different types of spreads out there.

1.straddles are buying both calls and puts and hope the stock moves big in 1 direction.  If the stock moves far enough you will make money with this.

2 credit spread are when you buy a less expensive option and sell a more expensive option.  You keep the difference as long as the option expires worthless.

This site will give you an example of many different types of spreads.

http://www.stocks-simplified.com/spreads...