Spread betting is a form of financial trading that involves no ownership of shares, however the ability to trade on real stocks, shares, indices and forex based on market positions.
Spread betting allows traders to speculate on the movement of a certain assets – like a company stock, currency pair or even an entire index – without physically owning the asset or stock.
With financial spread betting, you predict an outcome, and the extent to which you are right or wrong determines the size of your financial profit (or loss). Spread betting differs from alternatives such as standard betting, where you have a simple win lose outcome and an exact profit or lost based on fixed odds bet.
When financial spread betting, the outcome you're speculating on is the direction in which the price of a financial instrument will move, up or down. If it moves the way you predict, your profit will grow the more it increases, alternatively if the market moves against you, your loss will also increase as the price movement becomes greater. Spread betting on the price increasing is referred to as going long, while betting that it will decrease is called going short (or ‘shorting’). Due to the nature of this type of betting its very exciting and profits can be significant, however they can always go the other way and this must be considered when spread betting.