If you’re looking to make extra money online, and live in the UK or Ireland, have you considered becoming a spread betting affiliate?
If this question doesn’t even make sense to you right now, then never fear.
Simply read on to learn all about spread betting and how you can utilise this trading instrument to earn great commissions.
Spread betting is a financial derivative (which means a contract which has its value based on an underlying asset) that allows you to speculate on the movements in price of a specific underlying asset. These assets could be currency pairs, shares, commodities, treasuries, etc. Unlike traditional financial market contracts, you never actually own any asset.
This is how these contacts work. First, you decide what asset you want to place your bet on, then decide whether you think the price will go up or down which in turn determines whether you ‘go long’ (buy) or ‘go short’ (sell.)
Next, you designate how much you want to bet per ‘point’. Points represent the change in price and vary between contracts and markets. For example; a share might have a value of one point per pence so rising from £10.00 to £10.50 would be a 50 point change.
The final step is to monitor your trade and close it at a time you deem suitable.
Let’s say that Company X releases some news stating that they made more profit last quarter than they expected. This is a positive story and you might decide that their share price will rise off the back of this news so you want buy or ‘go long’.
Let’s look at two examples to compare spread betting against buying traditional shares.
Purchasing shares: if you purchased 100 shares at £20 per share and then one week later sold them for £23 each you would have made a profit of £300. Out of this profit you would still need to deduct commissions charged by your broker for entering and exiting the trade and you may also have to pay taxes. Also, with no leverage available you would have needed the entire £2,000 purchase price up front.
Entering a Spread Bet contract: we will assume you can buy the bet at £20.05 (slightly higher than market price due to the spread) and that after one week the price has risen and you sell at £22.95 (slightly lower than market because of the spread). If one ‘point’ is equivalent to one pence then your trade has risen by 290 points. When you purchased your spread betting contract you would have also specified your amount to bet per point. We will use £1.00 per point in this example. This means your profit is £290.
Note that: no commissions or fees need to be deducted from this profit amount (as the broker made their income already from the spread - which is why you paid slightly more than market and sold slightly less) and you also have zero tax obligations - meaning you actually earn more from the spread betting trade.
The final point to consider is that you can use leverage for your spread bets and if your broker lets you use a 10% deposit then you would only need £200.50 to enter and have the same market exposure as the ‘purchasing shares’ example.
On the flip side, an example of leverage working against you is if you got the bet wrong and the share price of Company X actually dropped to £17 per share. If you had purchased the stock you would now have a £300 ‘paper’ loss but can just hold on if you think it might rise again in the future. However, under the spread betting contract, because you are leveraged and only have a 10% deposit of £200.50, your broker will either automatically close your trade or ask for more money to be deposited.
If you don’t have any audience within the UK and Ireland then there is no point in becoming an affiliate for spread betting brokerages. This activity is illegal in the USA and other countries. Consider promoting Forex or Binary Options instead.
On the other hand, if your audience is located in the UK or Ireland you’re all set to go.
Right. You now know what spread betting is, how it works and who it’s suitable for. Now we’ll turn our focus to why you should be promoting spread betting to your audience and what benefits they can personally receive from trading with spreads.
You can use the above material to help promote spread betting to your audience if required.
Becoming an affiliate for spread betting programs can help you effectively monetize your audience. With all the benefits of spread betting outlined above, it’s easy to see the attraction for would-be investors and traders to get started. It’s simply a matter of targeting the right segment of your audience with the right message to get them motivated into joining (and earning you some affiliate commissions along the way.)
As the online trading industry grows, there is increased demand from traders to find the best platforms. This in turn encourages brokers to offer more generous affiliate commissions in a bid to capture some of this new business. By joining this market and becoming an affiliate you can send interested members of your audience to a trusted broker creating partnerships that reward all parties involved.
And it doesn’t end there. If you can continue to build your audience and effectively promote your affiliate partners by providing honest feedback, in-depth reviews, thorough comparisons and educational resources, then you’ll strengthen your position as a credible and trusted source for spread betters.
When looking at any type of affiliate program it’s imperative to identify the different ways that you’ll receive commissions to ensure you select one that’s appropriate to your requirements.
Earnings vary dramatically based on a number the different components - how big your audience is, how engaging the promotional material is, what brokerage program you join, commission type and actual rates. This makes it difficult to estimate what your earnings will be.
Consider the following example:
We will assume you have a website with 10,000 visitors per month and that your affiliate promotions to convert 2% of your audience into trial accounts.
Of these trial customers, 10% become clients for your chosen brokerage firm which pays you a CPA of $600 per account.
Under this scenario you would be earning 10,000*2%*10%*$600 = $12,000 per month in affiliate commissions.
Adjust the equation to reflect your own situation and try a few variances to see what you could be earning as a spread betting affiliate partner.
When it comes to choosing your affiliate program, commission isn’t everything. There are a few other very important things to consider:
These are all fairly basic checks but if you follow through and create a great partnership with a trusted, pro-active spread betting broker then you will be setting your business up for a bright future.