It is a known fact that online spread betting providers are gaining favour for several reasons. First, because any profits you make are tax-free: this activity is classed as gambling, even though you may be trading exactly the same shares as you would through a conventional tax-paying share trading account.

The second reason for spread betting’s popularity is that you can trade on margin meaning that you don’t have to pay for the full cost of your position exposure. You see with spread betting you aren’t actually buying the shares; you are simply betting on the direction of the price of those stocks and shares. And you can bet any amount; you could bet £5 per point that Microsoft’s share price will rise, or you could bet £500 per point. The more you bet per point, the faster you could make money, but also the faster you could lose it, of course.

But whereas you’d have to be a millionaire to buy sufficient Microsoft shares outright to guarantee that you’d make or lose £500 per point of price movement, you’d only need a small percentage of the total price of the shares to trade the same amount through financial spread betting. It’s an exciting way to trade, but unlike a conventional share trading account, you could potentially lose more than your initial deposit.

And the other important factor with spread betting is that you’re not limited to shares. You could trade the movement of the FTSE as a whole. You could trade the price of gold, or coffee, or pork bellies, or the Nikkei index, or the Dow, or oil futures, or almost anything else that is bought and sold in high enough volumes.

You could even make money from falling house prices. Some of the spread-betting companies allow you to short the price of houses, based on future contracts, usually 3, 6 and 9 months ahead, although some may allow you to bet a year or more ahead. It may not be worth doing so, however. For a start, the spreads are huge, so you’re instantly facing a major loss as soon as you open your trade. And second, you usually only have the choice of ‘UK’ or ‘London’, measured using one of the main house price indices such as the Halifax.

So even if you know for sure that house prices are falling in your neck of the woods, you can’t capitalize on this unless they’re also falling across the UK as a whole (or all of London, if that’s where you live). For anyone seeking to hedge against the falling value of their house, this is probably not the way to do it.

But there are plenty of things worth trading, either short or long. It’s unlikely that the world’s stock markets have completely recovered yet, because there is almost certainly more bad news to emerge from financial companies over the coming weeks and months. So you can expect plenty of volatility, during which you could potentially make money on both the ups and the downs. Or lose it.

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