Scope
Spread betting markets are quoted on all manner of things, and are made up by the broker rather than being a publicly traded market. Because nothing physical is being bought or sold in a spread betting transaction, the market can occur between broker and trader directly, which brings with it accompanying tax advantages to trading in the spread markets rather than trading in the underlying markets directly. This, coupled with the leverage inherent in the structure of a spread betting transaction makes like-for-like investments in spread betting far more profitable (and risky) than their direct counterparts.
But aside from the sheer financial benefits of spread betting versus direct investing in the underlying markets concerned, spread betting also opens access to a wide variety of alternative markets, often covering markets and indices that simply can’t be traded directly. This delivers an additional helping of flexibility, which combines to make spread betting a more attractive investment prospect.
Much of the magic with spread betting comes down to managing leverage, researching markets and positions, and trading with a sensible, level head. While there are significant strategy components to profitable trading long-term, knowing what you’re doing and understanding the implications of certain trading decisions is the first and most central stepping stone to protecting your capital and delivering a solid return on investment.