What is spread betting
Spread Betting is a type of financial investment which involves stock market trading. It is nothing like betting on sports, which is what the name might imply. Obviously it is still a gamble, as are all investments but it is regulated by the FSA in the UK and is tax free so is considered to be as safe an investment as other stock market ones.
Like any investment type, it is important to know more about it before you start. There are a number of countries that offer it and many of them have an online service which can make it very convenient. It is worth looking at the different companies and seeing which one you like the look of, some you may have heard of and some you may not have.
When spread betting you do not purchase an investment but you place a bet on whether that particular market will rise or fall. If you are right then you get back the money you bet plus the number of points that the market has moved by. If you lose then you not only lose the money you bet, but the amount of points it moved by.
This is seen as a great way around the costs of the prices of investments falling. Buying and selling share is great when the stock market is going up as you can buy at a low price and wait for them to go up in value. However, when prices fall, many people sell their shares and look elsewhere to invest. By betting on a falling market, money can be made in this situation too.
Obviously the markets are difficult to predict, so it is important to study them for a while before you start to spread bet. If you can learn more about something, then you are not taking such a big risk with your money. It can be a lot of fun, once you learn more about it and understand how to be sensible with it. There is a big risk though, you could lose more money than you bet and so you need to be prepared for this and make sure that you can afford to lose it.