Financial Spread Betting is a innovative form of trading that allows you to profit from predicting the general direction of well-known market indices. It has a wide range of applications suitable for a broad spectrum of investors, enabling you to back your market knowledge by trading on the price movements of numerous shares, stock indices, currencies, commodities and bond futures. If you follow the markets and believe that the price of a particular index, such as the FTSE or the NASDAQ, will rise or fall before a certain date in the future (the expiry date), index trading will enable you to back your judgement.

You specify how much in Pounds (£) you wish to trade per point movement in the market. It is essential to note that you are trading per point movement. You are liable for an open position in the market and the outcome of the trade is as variable as market sentiment itself.

The financial betting company will give you a two-way quote. The quote will take the form of a 'spread'. The spread is made up of two price quotes, which usually straddle the underlying market price. There is a higher, 'offer' price for 'buyers' and a lower, 'bid' price for 'sellers'.

If you think that the price of the market will rise above the offer price before the expiry date is reached, you buy (also known as 'going long'). If you think that the price of the market will fall below the bid price before the expiry date is reached, you sell ('going short').

If you buy NASDAQ for £1 a point, you would gain £1 for every point the market rises above the offer price. If you sell for £1, you would gain £1 for every point the market falls below the bid price.

Alternatively, if you buy the market for £1 a point, and the market then moves against you (i.e. falls), you will then lose £1 for every point the market falls below the offer price.

Similarly, if you sell for £1 and the market proceeds to climb, you will lose £1 for every point the market rises above the bid price.

With a financial betting company you have to submit a mandatory stop loss, which will limit any potential losses. A 'stop loss' is the price at which your position has achieved a maximum acceptable loss.

Financial betting involves a variety of markets including Shares, Market Indices, Currencies, Bonds, Interest Rates and even Orange Juice!

Areas covered by financial betting include:

• Stock Market indices - Trade FTSE, Wall Street, DAX, CAC, MIB and NASDAQ, Hang Seng, Nikkei or many other of the world’s major stock market indices.
• Currencies - Buy dollars, or sell the Euro! Deal on all of the world’s major currencies and their cross-rates.
• Commodities - Gold, Oil to pork bellies and Orange Juice - bet on a wide range of metals, oils and agricultural produce.
• Bonds and Interest Rates - We trade a wide range of interest rate contracts shadowing the LIFFE, US and European bond futures and interest rates.

Spread betting allows you to hold highly leverage positions in financial markets these are exposed to the underlying market, thus it carries a high level of risk. Although your winnings are unlimited, your losses can be large if your judgement is wrong.