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The Naked Trader's Guide to Spread Betting: How to make money from shares in up or down markets by Robbie Burns

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2. The Knowledge: I

Spread Betting Compared to Normal Share Dealing

I’m assuming you have bought a share before, either on the phone or more likely online using one of the many execution-only brokers out there. There are many small differences of detail between trading in shares and spread betting, but here are the three main big differences:

1. There is no market

When you trade shares you deal through a stockbroker, who acts as an intermediary to pass your order through to the market (where the market is comprised of other buyers and sellers and market makers). When you spread bet, you deal directly with a spread betting firm – there is no market and the spread betting firm is acting as a principal not as an intermediary. This is important ...

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