Forex spread betting is the action of betting on a currency pair going up in value or down in value by the last two decimal places of a currency, this can be as little as a tenth of a cent. The forex market contrary to belief really has nothing to do with your local foreign exchange although the prices will be within the same range.
So how does forex spread betting work? People trade on the forex market every day, in fact it is the biggest financial market available for speculators and boasts a massive 3 trillion dollars being traded 24 hours a day 5 ½ days a week. Forex trading has become available to the average person from the comfort of their homes through spread betting accounts, these companies make their profits by placing a candidate into a trade a couple of pips behind the price they requested, so win or lose they have already taken their profit.
Essentially forex spread betting is making informed decisions on whether a currency pair is going to increase or decrease in value. The format of a currency pair is displayed; GBP/USD, Great British Pound V's United States Dollar, It is the first currency in the pair that is represented as 1 whole, in this case 1 whole pound. The price shown is the value of the second currency in the pair against the whole first currency, for example, if the price was showing 16000 then the 1 GBP would be worth $1.6000.
Notice that the value shows 4 decimal places, it is the last two decimal places that you are betting on in forex spread betting, these are known as pips. If you where to wager £1 a pip for every forth decimal place that the price fluctuated would be worth £1, for example if the price moved to 16010 and you had bet on the price going up then you would be £10 in profit. If you had bet on it going down then you would be £10 in the red.
The forex market can move hundreds of pips a day so you can see the potential for massive profits, and also huge losses if you get it wrong. If you try and guess which way it is going you are just gambling and will probably have more success on the roulette wheel. Professional forex spread betting traders make informed decisions on the correct trades to take and practice their theories for winning strategies.
Resources
Forex Spread Betting Definition | Investopedia
http://www.investopedia.com/ Mon, 25 Aug 2014 17:14:21 -0700
A category of spread betting that involves taking a bet on the price movement of currency pairs. A company offering currency spread betting usually quotes two prices, the bid and the ask price - this is called the spread. Traders bet whether the ...
Understanding The Spread in Retail Currency Exchange ...
http://www.findata.co.nz/Markets/FOREX.htm Tue, 09 Sep 2014 07:26:15 -0700
Understanding how exchange rates are calculated and shopping around for the best rates may mitigate the effect of wide spreads in the retail forex market.
0 Spread Forex Trading Guide | Forex Diary
http://hiawathadiary.com/ Sun, 28 Sep 2014 16:25:59 -0700
For example if you purchased 1 Pounds in January 01 in Present cards 01 000 Euros it will 0 Spread Forex Trading Guide cost you 1 00 USD. Best 95 forex traders lose best curso de forex en miami 10 points 3 forex ea robot ...
