When speculating with currencies you deal with the movement of currencies against one another and you end up buying currencies in the expectation that the currency trends will start moving in your favor. Spread betting on currencies entitle you to certain benefits which normal currency trading does not offer. One of the most important benefits in this regard is the tax free nature associated with spread betting. Traditional method of currency trading including the likes of CFD’s, futures and options makes your profit liable to both commission as well as capital gain tax which is not so in the case of spread betting of currencies.

Also the exchange rates being offered on spread betting of currencies is much better than what any bank could offer you. when spread betting on currencies it should be noted that the currencies are usually quoted in 1000’s units. Now comes one important point to understand. Let me first write it down and will then go on to explain what it means by the help of an example. The point says that the second quoted currency always depicts the amount of that currency which you need in order to buy 1 unit of the first currency. Let me now take an example. In the case of $/Yen=1.1815 you need 1.1815 Yen to buy $1.

Also worth remembering is the fact that when the quoted price is found to be rising then in reality it is the first quoted currency which has strengthened against the second quoted currency and in the case when the quoted price falls then it depicts the strengthening of the second quoted currency against the first currency. Keeping in mind all this when you proceed to carry out spread betting on currencies it would be a good decision to buy or go long on the quoted currency if you anticipate the currency to strengthen in the coming time.

• If you are a beginner with spread betting on currencies then I would advise you to start betting on one pair of currencies as they themselves offer two starkly different characteristics.
• The USD/EUR is the most commonly traded currency pair. The reason for this is the increased liquidity attached with this pair which simultaneously translates into tighter spreads.
• Also one must remember that some currency pairs move in co relation to one another either in the same direction or in the opposite direction.
• The foreign exchange market is known to show prolonged trends which carry on for a much longer duration. Interest rates, fundamentals and technicals are found to be the driving forces which propel the forex.
• If you wish to keep a short duration stance on the currencies which stretches for a few days then it is always a better idea to keep a spot currency bet.
• On the other hand forward FX bets are best suitable if the currency holding duration is desired for a longer time frame.
• With foreign exchange spread betting you get a better chance to leverage as against to the opportunity you would have got for the same if you would have betted on assets like stocks and equities.
• To achieve maximum success in spread betting on currencies it is very important to keep a look out for pivot points which actually are levels of support or resistance at which the movement of currencies are likely to reverse. At the support level the currency is unlikely to fall further while on the other hand at the resistance level the currency is unlikely to grow further.