Spread Betting Stake A Penny Win A Pound

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Similar in some respects to the CFD, spread betting can be done on a large number of stocks, and major Stock Indexes such as the FTSE 100 Index, or Dow Jones Index, or the S&P 500 index, etc.

An ideal website to visit, to start learning about spread betting is www.financial-spread-betting.com who offer a very comprehensive quick-learning page on their site.

We start with a few opening basics about spread betting…

Firstly, do not be put off by the word ‘bet’ which carries for many people, a number of totally unnecessary, negative connotations and preconceptions…

Spread betting is not like traditional betting, where a ‘bookmaker’ gives you ‘odds’ and usually ends up taking 100% of your original outlay. Spread betting is, in a nutshell, the offering of a ‘middleman’ in a cross-trade (very similar to CFDs) between one party (you) and another party (another person like you who takes an opposite view on a stock or index price). To explain further…

For example, if you bet that the FTSE index will go up, then, unlike traditional betting, you are not betting against the dealer, but someone else (another trader just like you who could be on the other side of the planet) who has an opposite view of the market (he or she obviously thinks the FTSE is going to go down, while you judge that it will go up). For every pound won, there is a pound lost (or for every winner there is a loser, as the saying goes) – as in every other stock market transaction…

The spread-bet dealer is therefore simply an intermediary (rather like a broker) between the two parties. He is neutral (there is a tremendous amount of money to be made staying neutral in this business). This is as simple as it gets, and creates a tradable marketplace where the spread bet dealer – a middleman – employs a rather sophisticated computer system which matching the buy/sell orders throughout the trading day (even overnight in some cases).

So, how do spread bets work?

Firstly, you deal through a spread bet-dealer. There are a number of these in the city of London. These spread dealers will send you a full, detailed, easy-to-understand information package which covers just about everything you need to know (including many trading examples and illustrations, etc.) in order to start trading spread bets…

Similar in some respects to ‘CFD’ trading, you can use spread betting to back both rising and falling markets. It is an ideal instrument (like the CFD) for trading the indexes, which we cover, when the index-trend is down, as well as up.

For instance, with the FTSE index, you can bet anything from


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