The history of Financial Spread Betting began in the City of London in the 1970′s, when a banker named Stuart Wheeler introduced this concept of financial trading to a group of friends allowing them to set the price of gold for the upcoming week.

The price they set would be the price for the rest of the market for the following week. Stuart Wheeler began by setting a sell price and a buy price and then allowed his friends to speculate the price of gold whether it would increase or decrease in the next week.

The popularity of Stuart Wheeler’s gold offering widespread in the City of London, and it pulled the attention of many dealers which lead Wheeler to set up a company called ‘Gold Investors Index’ which is known now as ‘IG Index’ one of the largest financial spread betting companies in the world, IG Index held a spread monopoly for years, but due to the continuing demand for this form of trading; some companies have been introduced to the market ( City Index, Sporting Index, Capital Spreads and many more).

In the late 1970′s, as the demand for betting on gold prices peaked, Stuart Wheeler added a new range of financial products to the IG Index in the early 1980′s: currencies, commodities and indices, the concept that lead to continual growth throughout the 1980′s.

What is financial spread betting and how I can make money with it? What are the benefits for me as a new user to the financial spread betting world and how can I swim with the big sharks? How can I start my way in the financial spread betting world with minimal risk?

These questions and many others are often asked by beginners new to the financial spread betting world and it is good for them to ask such questions.  In fact it is a good idea to raise such issues before you open your financial spread betting account.

Since this is your hard-earned money that is on the line you should be careful with what you do with it and with whom you are depositing it with.   In addition there are many spread betting systems on the internet and most of them are losing money.   If you want to make money spread betting then you have to act differently from the herd; remember that in the end 80% of day traders lose money so the ‘popular choice’ for a market direction might not be the right one.

Remember that with spread betting you don’t buy stocks or any commodities, you don’t need to store anything and ship goods – you are simply placing a directional bet (either up or down) on the price of a financial instrument.

What is Spread Betting

If you believe that the price of a share will go down for example, you can place a spread bet at GBP50 a point that its value will drop.   Supposing that the value does indeed drop and the share price, say 100p goes down to 96p you stand to make GBP200 (4p x GBP50).  If the stock price stays 100 or indeed rises to become 103, your prediction has been proven to be wrong and you would have lost money in the process

There are many financial spread betting tips to learn before going for the real money bets, take this as a first tip…

With spread betting, you don’t have to be rich to open a spread betting account and the product doesn’t discriminate between clients. The opportunities are open to all kind of traders and investors.  Whether you are a small fish and new to the markets or an experienced long time trader you can still place small size bets for as little as £1 or trade in bigger sizes..

No currency risk: All spreads bets are made in your local currency thus eliminating the currency exposure.

No taxes on your profit, no stamp duty to pay and leverage option opens up opportunities to dramatic profits (or losses).

Profit from Rising or Falling Markets.  Spread betting allows you to make money from rising or falling markets.

Can one make a living in Spread Betting?

Spread betting is a financial activity that attracts more investors day after day. However, it takes a few months or years for traders to start making some money out of trading and most traders give up before then. Spread betting can make investors handsome profits but it takes just a few bad trades to wipe out all these gains, investors should be able to handle their emotions as they are a very important aspect in any kind of trading.

It is possible to make that million out of spread betting but one needs to make sure that to achieve this is not always as easy as it seems and traders should expect to make some profits sometimes as well as incur losses the other times.

Education and learning from your mistakes is part of the learning process and more time you spend on education the more successful you will become.

Does One Need A Trading Plan for Spread Betting?

When you take a trip, go to university or just meet up with your friends you plan what you are going to do and how you are going to do it. When you take a trip you plan which cities to visit, where you are going to stay, how much money you are prepared to spend, etc. Financial spread betting is not an exception; when you are ready to start your spread betting journey make sure you have a trading plan – how often you are going to trade, how much money you are ready to put at risk and what your ultimate goals are. There is a saying “If you don’t know where you’re going, you will never get there”, it applies to spread betting more than to anything.

What is Leverage?

Leverage is a process whereby traders can increase their gains (usually by obtaining finance from the broker) to fund particular transactions, used to amplify small incremental gains to deliver more generous returns.

With spread betting, the leverage component is inherent in the nature of the transaction, with one incremental percentage point delivering 100% returns on the initial stake.

Example: A spread bettor places a £10 wager on the price of Company X’s shares. When Company X’s share price increases by 1 PIP beyond the spread, the trader earns an additional £10 on top of his original £10 stake – thus has made gains of 100% for a small movement in price, by virtue of the leveraged nature of the transaction.

Is Leverage A Good Thing?

Leverage is a good thing when the markets are moving in your favour, providing much more significant returns than point-for-point trading. Indeed, where leverage is financed by the broker it provides an opportunity to escalate exposure and resulting winnings on a particular trade, and is a virtually essential component for those looking to make their fortunes in trading.

However, leverage can also work against you to the same degree, and in spread betting losses are not limited to the amount held within your trading account, and can go multiple times beyond your initial stake depending on market movements.

What Can One Trade with Spread Betting

When financial spread betting was first introduced to the market, spread bettors didn’t have any other choice but spread bet on Gold price, but with this sort of financial trading growing drastically, more instruments were included in the market.

There is a wide range of instruments available in the financial spread betting and they are generally grouped inside these main categories:

Indices: FTSE, DAX, CAC, DOW, S&P500

Stocks: FTSE100 constituents, FTSE350 constituents, overseas stocks

Currencies: USD/JPY, GBR/USD, EURO/GBR, EURO/USD

Commodities: Gold, Silver, Brent Crude, Wheat, Corn

Others: interest rates, bonds, etc.

How to Get Started

The vital components to getting started are a spread betting account with one of the web’s leading spread betting brokers and an initial capital amount to deposit for trading purposes. However, it is also recommended that you read and research financial spread betting thoroughly before launching in, and take the time to try out a few ‘dummy’ trades or even open a demo account where possible until you find your feet.

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