Spread Betting the Financial Markets

Spread betting is a form of investing that allows you to take a leveraged position on a given security. What happens is a spread Company will give you two prices for a stock an offer and an Bid Price.

Traders can either choose to bet that a stock will be higher then the offer or lower then the bid. For example if a spread company gave a bid for $300 and an offer for $302 you may choose to bet $2 that the stock will be above $302 by expiration.

In this case for every dollar that the stock finishes above $302 you make $2, so if the stock closes at $312 you make $20. However the opposite is also true, you lose $2 for every point the stock is under $302, so if a stock closes at $292 then you could lose $20.

Like everything else in the financial markets you can use stops while spread betting and this privilage should definitely be utilized, because if not your losses may grow indefinately on 1 bad trade.

Unfortunately this form of trading is seen as too risky in the US and is not allowed for United States Citizens.