eToro is one of the most trusted trading brokers in the industry.
They offer a wide range of great services. One particular service which you may be curious about is spread betting.
If spread betting is something that you feel interests you then you are certainly in the right place.
Here we will attempt to clearly outline exactly what it is, the risks involved, and whether eToro spread betting is actually available.
Want to know even more? Then check our eToro reviews.
Let’s get started:
What’s Spread Betting?
Spread betting is a form of speculation often popular with traders where you do not actually own any of the underlying assets. Money is made on spread betting through the movement of the spread.
As an investor, in the easiest to comprehend terms, you place a bet on the direction in which you think the asset will move. You are not betting directly on the asset itself, but the difference between the ask and bid price of the asset (the spread).
Typically, bets are placed on the number of points a spread will move. Moving in the correct direction can bring fast profits in some cases, particularly when markets are volatile, though it is a risky type of trading. The more the spread on the asset moves within your set expiry date or time, the more you stand to make or lose.
With spread betting through most brokers, you can typically bet on a market to go in either direction you choose.
Spread Betting Costs
One of the major attractions when it comes to spread betting particularly for UK and EU-based traders is the fact that it is both commission-free and tax-free.
Spread betting also retains this benefit of being non-taxable and offered without any commission.
When we are considering the costs of spread-betting though, you should remember the fact that much of this betting can be leveraged, and the market can move very quickly in either direction.
So when it comes to direct costs, we can conclude that these are very few, particularly in the UK where spread betting is exempt from any kind of tax, and with no commission added by the broker. Simply put though, spread betting remains very risky.
Is Spread Betting available on eToro?
Spread betting may have many traders attracted to the lure of fast profits. In truth though, this is not much more than a punt in which you could lose more than you deposited with the majority of spread betting brokers.
Spread betting is also not suitable for Islamic traders due to the betting nature of the trades. These are considered haram in Islamic trading and thus not allowed. This immediately excludes a large number of traders who are very well looked after by eToro Islamic trading to ensure the most suitable environment possible for Shariah law compliant trading.
With these as a couple of reasons, and preserving what they feel to be the best interests of traders, eToro does not offer spread betting to traders at this time.