Why has the recession caused a surge in spread betting?

Since the onset of the credit crunch, there has been a surge in interest in spread betting in the UK, and other countries where spread betting is commonplace.

Although technically speaking, spread betting is just like normal betting and requires an expiry date at which point the profit or loss is realised, the level of risk can be minimised using different techniques.

Firstly, you never actually make a purchase when you place a trade. So, for example, if you wanted to make a spread bet on the FTSE100, you would not actually be purchasing any shares but would instead simply be stating in which direction you believed the index would move.

Unlike investing directly in shares, a spread trading company does not take a commission or charge a fee but instead makes their money through the bid-offer spread. Also, unlike direct investment, because technically it is betting, spread trading is subject to betting laws and so any profit made is completely free of tax or stamp duty of any kind.

During the recession, many people have lost money through the shares they owned but some wise spread betters have made a killing by predicting the downfall of these markets. At times like these, more people than ever before are choosing to speculate tax-free rather than purchasing shares.