Spread betting is different from traditional trading in many respects. Those interested in gaining from trading should know about the features that spread betting offers so that they may benefit from it as well. Here are the differences between traditional trading and spread trading:

Physical ownership: in the case of spread betting, traders do not own the instrument physically and therefore only hold the instrument. In contrast, traditional traders own and hold the shares physically which gives them shareholder rights that can be used to influence the corporation.

Stamp Duty, commissions: spread betting is free of any charges, stamp duty and capital gains. This is in contrast to the traditional trading which is subject all these charges. In addition, spread betting is not subject to any commissions as is the case with other forms of trading. Traders interested in making profits opt for spread betting as there are no extra charges applicable on it.

Leverage: spread betting offers the opportunity to trade on leverage or margin. This means that traders can increase the trade size even after entering with a small capital outlay. This leverage helps the traders considerably in magnifying their trade gains when the prices move in the favorable direction. This advantage is not available with other forms of trading.

Ability to Trade long and short: spread betting offers the advantage of going long or short. This implies that traders can put in their money even in the falling markets, predicting a downward movement of prices. Nevertheless, in conventional trading, traders usually buy trading instruments like shares anticipating an upward movement and these instruments cannot be traded in the reverse direction.

More and more traders are opting for spread trading as it offers many advantages over and above the traditional trading, leveraged trading and free from stamp duty and capital gain taxes being the foremost. Nevertheless, profits also depend upon the dividend policies of the brokers.