Summary: Spread betting is not an activity for beginners to financial markets. It can be very high risk. For those that take part, FTSE spread betting is at the core of the financial gambling world. This page explains more.
As mentioned elsewhere on this site, there are a number of factors which have placed the UK's FTSE 100 Share Index at the centre of the financial spread betting world. They are:
- Spread betting was invented in the UK by a Briton.
- Many of the early clients of the spread betting companies were based in the City of London and worked within the financial services sector (many were apparently financial traders).
- For these reasons, the FTSE was the first stock market to be quoted.
- Spread betting - along with most other forms of gambling - is not allowed in the United States. This means that the usual focus on American markets that happens in so many industries and sectors has not occured, leaving the United Kingdom as the main location for administration.
It might seem odd, but while Americans are unable to become customers in this industry, people from all around the world can and do bet on their major indices.
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Spread betting is actually an unusual form of gambling. In many
countries it is a regulated activity. In the UK for example, most forms
of gambling are regulated by the
Gambling Commission
but spread betting, in contrast, is regulated by the
Financial Services Authority. This means that the experience of gambling with a traditional
bookmaker or casino is very different to that of a spread bet. It is
more difficult to open an account for example.
And yet, the profits earned through spread betting are not taxable in many countries (neither as income nor capital gains, though there are exceptions and it is wise to research your own personal situation thoroughly). Tax free money is certainly a big draw when it comes to attracting new clients.
In terms of financial markets, as mentioned above, the FTSE is
still very important. The major spread betting companies quote prices
for all of the major companies listed on most major stock exchanges, so
there is no shortage of options! In fact, there are many national
subsidiaries to help potential financial market gamblers from around the
world find their most appropriate market... However, due the factors mentioned above, London retains a firm hold on the industry.
It is worth noting that it is possible to spread bet on the FTSE
and it's constituent companies during some 'closed' hours before and
after the normal market trading hours.
As might be imagined, it is possible to trade multiple FTSE timeframes.
There is a 'Daily FTSE'. However, for less volatility, many traders
might find the 'Quarterly' market to be a little more appealing. However, as the use of high frequency and algorithmic trading strategies has shown around the world, it is much more possible to guess or predict the movement of a share price or index over a smaller time period than a longer one. Therefore, while a quarterly bet might seem lower risk, it may be much more likely to see a big move than the daily bet.
Once again though, we would like to point out that this is a high-risk financial activity. It should only be done after significant research and expertise has been built up. There is the potential, when spread betting to make both incredible gains and losses very quickly.
To read more about related topics, please follow these links:
Spread Betting Financial Markets For Beginners
Who Are The Main Spread Betting Companies?
How To Spread Bet - 7 Important Lessons For A Beginner
3 Great Spread Betting Tips
How Easy Is Spread Betting Shares?
Spread Betting Forex Markets
What Spread Betting Software Should You Use?
How To Make Successful Financial Spread Bets