The long and short of spread betting

When researching spread betting, you will no doubt come across much ‘jargon’ or seemingly technical-related terms that may confuse you at first. However, once you become familiar with them, spread betting is surprisingly simple – or at least placing the spread bet is, you still need to learn your market.

A spread bet is called a market derivative. It is called a derivative because the spread betting customer does not actually own any shares or anything to do with the market in which they are placing their trade.  Instead, the win or loss is based upon the performance of that market.

To bet ‘long’ means you are attempting to make a profit from the market rising – in other words, you believe it will do well.

To be ‘short’ is the opposite – you think the market will decrease or do poorly. In this case, you make a profit from a fall in the market and this is how many spread trading professionals have made a killing whilst the rest of the world watched in dismay as their pension or investment was lost on the financial markets.

Spread betting is not limited to shares, and unlike profits from actually owning shares the profits are all tax free. Spread betting can be made on almost any market, including foreign currency trading, spread trading on the gold market, or on anything.