What is Spread Betting?

Spread betting is a new form of speculation which involves placing a bet on the price movements of certain financial securities, such as stocks, bonds, and commodities. Instead of buying or selling the stocks or commodities, investors simply bet against these companies on whether the closing price of the underlying security will be lower or higher than a specific quoted price that the company determines. Financial spread betting is simply speculation on the price fluctuations of investment instruments. The concept is simple, and just like trading stocks, you buy and sell based on predictions about the movements the security will make. There are many of spread betting systems and companies across the globe, and there are many websites that not only take spread bets, they also provide their members with software to analyze securities and place bets quickly and easily.

An Example of Spread Betting

If a spread betting company quotes a bid of $400 and an offer of $404 for stock BAC. If the user believes that the price for BAC will be lower than $400, they can bet any amount per tick that BAC stock will go below $400. Say the user "bets" $5 for every tick that BAC goes below $400. If the stock then moves below $400, the bet is a winning bet and the company will owe the user $5 for every tick lower that the BAC stock moved under $400. If the BAC stock moves over $400, the user will owe the site $5 for every tick higher that the BAC stock moves.

Major Spread Betting Companies

Spread betting has become a popular way to avoid the tax responsibilities that come with owning and selling real stocks on the stock exchanges. Each different company has a guide that will explain their policies and procedures related to taking and paying out bets. Here are a few of the more popular spread betting companies. 

The longest-running spread betting company is igindex. They are based out of the UK and provide users with easy access. Another great company is saxo spreads. They are an arm of Saxo Bank, which is a leader in global financial markets. Offering quick and easy access to the world's markets through online and mobile trading platforms, finspreads is a leading financial spread betting firm based in the UK. 

With a capital spreads account, traders gain access to various financial products. The site also accepts several major currencies. They pride themselves on creating amazing value for money and unmatched customer service to clients, capital spreads is one of the UK's leading spread betting companies. Having captured 60% of the UK's sports spread betting market, sporting index is the world leader in its field. City Index offers around-the-clock access to equity, index, currency and commodity markets all over the world through our innovative trading platform. Another global leader in online CFD and spread betting services is cmcmarkets.