What is spread-betting?

Hi there! As the market continues its turbulent trend, prices are uncertain and shares unstable. But if you play the market, you will appreciate the everyday challenges and the opportunity to find a new solution to consolidate and grow your money pot. There are of course no certainties, however when a stock market storm is brewing and you’re still looking for your pot of gold at the end of the rainbow, the experts say : “Spread bet!”. But what does it mean?

When you play the stock market you buy and sell shares. With spread-betting, you bet on whether shares will go up or down – you don’t buy or sell anything. So you simply designate the price per point and place your bet on whether options will increase or decrease. Easy? Not really, but there are a multitude of options: you decide on the direction, margin, value and stop-loss of the shares on which you are betting. The stop loss is the biggest loss that you can afford, the price that automatically closes out the bet: a real parachute.

Much like the broker who profits from market activity in either direction, the shrewd spreadbetter can also succeed in a troubled economy; “Volatility and falling shares prices are good for us. When shares go down, we are the only game in town,” says Tim Howkins, Boss of IG, Britain’s top spread betting and CFD firm.

For all the non-professionals, we have found one of the best explanations of what spread-betting means here: http://www.financial-spread-betting.com/Spread-bet.html.

And here are 10 things that you should know about spread bet: http://www.timesonline.co.uk/tol/money/investment/article1305642.ece. Many investors use spread-bets to protect their positions. But the usual risk warnings apply… they are bets and you can win or lose. Just hopefully win.