LetsCompareBets has produced this document as a guide to online spread betting. Introducing the concept of spread betting, types of spread betting, and history of online spread betting. The spread betting guide is not overly technical in it’s approach and is designed to help a beginner to spread bet. More detailed explanations and trading advice can be found on the other page.
How does spread betting work?
What spread bets?
How does spread betting work?
Financial Spread betting companies make a prediction of the outcome for a certain event at a certain time in the future. The event can be sporting, financial, or even political. In fact you can spread bet anything which can be assigned a numerical value. The spread betting company will quote a spread between the upper end (buy price) and the lower end (sell price) of their estimate on the outcome of the event. The spread is quoted in points and you stake an amount of money per point or, ‘pip’ as they are known.
Every point move in the underlying market is multiplied by your stake: magnifying your gains or loses. This multiplication effect is what makes spread betting different from fixed odds betting. If you think the points will rise you buy: if you think it will fall you sell. If you take a fixed odd at a bookmakers you know what your potential loss and gain will be. Spread betting companies have been kind – they let you use something called a stop loss that helps you limit and ring fence potential loses. Spread betting companies also differ from fixed odds bookmakers in that they don’t mind whether you win or lose. They will quote spread bets on lots of different markets….see below.
What spread bets can you make?
A spread bet can be taken on all kinds of events… Sporting, financial, political, or social. Financial spread betting companies were the first to the scene followed later by sports spread betting companies. The capabilities that the internet has bestowed has lead to a good range of online spread betting companies to choose from. Before opening a spread betting account the LetsCompareBets financial spread betting guide and sport spread betting guide are a good place to start learning about these types of spread betting.
Online spread betting
The first UK spread betting company was IG index that started in the ‘70s allowing people to spread bet the price of gold. IG index was shortly followed by City Index and later followed by Finspreads (owned by IFX markets ltd). Customers can now make spread bets either on the telephone or online 24 hours a day. There are now around 25 online spread betting companies in the UK market… the
best are summarised in the spread betting account comparison. As you will see some spread bet companies charge a commission and some do not. The spread factors in the spread betting company’s profit margin. They may also hedge their bets by actually buying assets in the underlying market.
People who read our spread betting guide also read our
Financial spread betting guide