Financial spread betting or spread trading is a simple but versatile tool which allows you to profit from both upwards and downwards movements in market prices. It involves predicting the future price movements of a financial instrument, e.g. share, commodity or index, for a specified amount per point of movement.
The 'spread', also known as the 'dealing spread', is simply the difference between the price at which you can 'buy' and the price at which you can 'sell' a particular market. When opening or closing a bet, you buy at the upper end of the spread and sell at the lower end.
When you open a spread betting position, you simply speculate on whether you think the markets will move up or down. This means that the more a price moves in your favour, the more money you make; the more the price moves against you, the more money you lose. With most spread betting companies you can choose from an great choice of shares, plus indices, forex, commodities and more. You can trade a number of different financial products on one account and the deal sizes are flexible, so you can bet in amounts which feel comfortable to you.
If you have never had any experience trading shares or currencies, financial spread betting may sound somewhat confusing and complicated. However, once you have gotten used to the basic idea and the terminologies, you will find a great tool that enables you to profit from both rising as well as falling prices 24 hours a day; Realtime and tax-free.