Financial spread betting works using the world markets such as the FTSE 100 and how it will react in a given day. It is easier to explain financial spread betting by example. On any given day you can find out on the web or by placing a call to a spread betting firm to find the “spread” on the FTSE 100. They will give a spread such 6350-6500 (6500 to place a “buy” or “up” bet and 6350 for a “sell” or “down” bet).
If you believe that the FTSE 100 will rise, you then place an “up” bet. You would bet a certain amount per point. For example you could bet £10 sterling per point. If the FTSE 100 rose to 6700 within the period specified by the betting firm (usually one trading day) this would be a raise of 200 points. This would mean that you would earn £10 x 200 points which would mean a net profit of £2,000 sterling.
If you were to feel that the market was going to fall then you would place a “down” bet. If we use the same example of £10 per point if the FTSE were to fall to 6200 which would be a fall of 150 points your profit would be £10 x 150 points which equates to a £1,500 sterling net profit. If the FTSE 100 were to rise however to 6500 you would lose £1,500 pounds.
Financial spread betting offers an easy way for individuals to bet on the movement of the market. Financial spread betting now opens the way for individual people to use the market other than through selling short in or investing in a hedge fund. It is more immediate and the potential profits are huge.
The financial spread betting review website offers an simple guide to financial spread betting . The website is owned by Jamie Forston-Merrel a day trader from London.