The 3 Minute Spread Trading
Manual

Spread Trading provides an opportunity to profit from the rise or fall in the prices of financial instruments. Instead of taking ownership of the underlying instruments, spread traders simply enter into a contract based on the direction of its price. As such spread trading is exempt from brokers' commissions, stamp duty, and capital gains tax, making it a cost efficient transparent and instant means of trading the financial markets.

Clients of MarketSpreads can trade a wide variety of financial instruments including equities, indices, commodities, currencies, precious metals, interest rates, and bonds.

To answer this question, it is best to use an example, such as a spread trade on the price of a share. You research the share price of a company that you are interested in e.g. Microsoft. You will have an opinion that the share price will either increase or decrease in the future. If you think the price will go up you "buy" the share price. If you think the price will go down you "sell" the share price. If your opinion is correct, you will make a profit, but if your opinion is incorrect, you will make a loss.

Shares on the Irish Stock Exchange are priced in euros and cents. In spread trading, each cent is given a value. You decide what value each cent should have. Let's assume you decide to give each cent a value of €10. Then, for every cent the share price moves up or down, you make a profit or loss of €10. You could, of course, give each cent a value greater or less than €10. It depends on the level of risk you are prepared to take. The bigger the value given to each cent, the bigger the potential reward and the bigger the risk.

To commence trading, you need to first open an account with MarketSpreads. This can be done by telephone or online and only takes a couple of minutes. You then need to deposit funds to this account. You are now ready to commence with your first trade. Every trade carries a potential profit or loss.The amount of funds required in your account to place a particular trade is explained on the Market Information page. Alternatively, our dealers can tell you instantly how much you would need to place each trade.

Like any investment, losses may be incurred. However, you can take action to minimise these losses. When recording your trade with MarketSpreads, you can state the maximum you are prepared to lose. This is called a "Stop Loss" and your position is automatically cut when you reach the loss limits you have specified.

In addition, a loss making trade can be terminated at any time, thus limiting any potential losses. You can stop the extent of the loss immediately by a phone call or by placing a 'counter' trade online. This is called "closing your position" and it is instantaneous, no waiting to contact a broker or hoping to find a buyer for your shares.

It differs in many ways.

Advantages of Spread Trading include:

• You can profit from falling share prices as well as rising prices
• It's free to open an account and you get free, easy-to-use charts on thousands of markets
• You pay a relatively modest “spread” on each trade compared with typically more costly broker commissions
• There is no stamp duty or capital gains tax
• Trades are executed immediately and you can set your own trade entry and exit levels
• Tools to limit your risk are at your fingertips including stop loss orders and decimal trading i.e. very small stakes
• It requires a much smaller outlay (typically 10-15%) to make the same profit as would be derived from buying shares
• You can protect or hedge an existing investment with a spread trade
• There is no currency risk when trading in overseas shares denominated in other currencies
• In addition to shares, you can trade indices, currencies and commodities
• You can do all your trading online or by phone and your funds are highly liquid

To be balanced, buying shares would offer some advantages:

• Investors have voting rights
• You receive 100% of dividends (you also get dividends with spread trading but typically it's 80% not 100%)
• You have the choice of receiving advice from your broker. MarketSpreads is execution only

Five simple steps to getting started:

1. Open an account here or by calling the MarketSpreads client team on Dublin (003531) 8630400
2. Post or fax (01- 863 0401) or email info@marketspreads.ie a copy of your passport or driver's licence, as well as two recent utility bills
3. Learn how to spread trade using the simple examples on our website
4. Read, understand and agree to our Terms & Conditions
5. Deposit funds via cheque, bank transfer or telephone our office to deposit via Credit\Debit Card

• Established in 2000, MarketSpreads is the first, largest and leading spread trading company in Ireland
• We offer some of the tightest spreads available anywhere including 1 point €/$ and Dax
• We endeavour to provide a service to the highest professional standards
• You can have a personal Trading Mentor assigned to you to help with your trading plan
• MarketSpreads is 100% Irish owned and your funds are secure and readily available to you in segregated bank accounts

Click to view Spread Betting on Share vs. Traditional Share Dealing