How they work

Financial spread betting bears striking similarities to traditional share dealing, but it gives you much more flexibility as you can profit both from rising and falling markets.

So, if you think that the asset is likely to rise in price, you would decide to buy it as you can sell it later at higher price and the difference would be paid out to you. If, on the other hand, you assume the market is going to fall, then you sell, to buy it back later at a lower price. Again, the difference between the opening and the closing price would constitute your profit.

Unlike traditional share trading however, instead of buying or selling a quantity of shares, with spread betting you would place a bet (known as a stake) on the direction you think the market will move. If for example you think that the price of the market is going to rise, you could open a position with a Buy stake of £1 per point. For every point that the market moves up in your favour you would make £1.

If, however, the market goes in the opposite direction than you anticipated, you would lose £1 for every point move.