Spread betting

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2. A brief history

Financial spread betting dates back to 1974 when IG Index was created specifically to enable people to trade the price of gold at a time when exchange controls prevented buying the metal itself without paying a hefty premium. Indeed, the name IG Index refers to Investors Gold Index.

For a few years IG had the market to itself, but it was eventually joined by City Index and Sporting Index (the latter's financial arm is known as Financial Spreads) and William Hill in the sports arena.

Not all of the country's four million fixed odds punters, nor all of the four million equity investors, will turn to spread betting, but many of the serious ones undoubtedly will. Why?

• the rewards can be higher
• it is tax free
• you can bet on a wide range of financial and non-financial instruments
• a small stake can be leveraged into a big profit

In 2000, two new companies - Cantor Index and Spreadex - began competing with the established players, and as the number of companies in the sector has grown, so too has the range and types of bet offered.

Financial investors can bet on spreads of:

• the direction of the world's stock indices
• individual equities
• currencies
• interest rates
• commodities
• futures and options
• grey markets

Sports fans can bet on spreads of:

• results
• outcomes
• scorers
• timing

in almost every sport imaginable.

• General interest betters can bet on issues as wide ranging as the general election and the Big Brother television phenomenon.

Methods and means of spread betting are changing too. Spread betting companies now offer 24-hour dealing and live internet trading. There are new and improved credit facilities available, and all now offer the option of limiting risk while keeping the potential rewards unlimited.

1. What is spread betting? 2. A brief history 3. Spreads on individual equities 4. Spreads on an index 5. Performance spreads 6. Other financial spreads 7. Practical advantages - leverage 8. Practical advantages - going short 9. Practical advantages - hedging 10. Practical advantages - volatile markets 11. Practical advantages - tax 12. Dynamics - think short term 13. Dynamics - the size of the spread 14. Dynamics - upside and downside 15. Dynamics - length of bet 16. Strategy - bet only what you can afford 17. Strategy - cutting losses 18. Strategy - stop losses and limited risk bets 19. Strategy - taking profits 20. Strategy - arbitrage 21. Opening an account 22. Placing a bet and managing your account 23. Regulation 24. Some more tips 25. Conclusion

• Financial Spread Betting
• The Beginner's Guide to Financial Spread Betting