So what is spread betting anyway?

Spread betting is a way to back your judgement on which way you think a market is going to go. Your profit is simply calculated as your stake multiplied by the difference in two prices - the price at which you opened the bet and the price at which the bet is closed.

The bet's price is based on that of the underlying instrument, which varies depending on the particulr bet, but may be the price of a share as we're focused on here at Enders & Power. It could just as easily be the underlying foreign exchange market for the Pound against the Dollar or any other market a provider is happy to quote.

When you open a spread bet you do so based on the current market price of the underlying instrument and the same applies when you close the position. 

Spread betting is unique as it is a hybrid of betting and the financial markets and is regualted by the Financial Conduct Authority. The 'betting' makes it tax free in the U.K at present under specific circumstances and the pricing a provider quotes on their platform simply mimics the price of that underlying instrument they track. 

This is made up of a bid and ask price as in the real  market and then the provider adds their own spread of for example a value of 1. 

You are with a spread bet in a position to make a profit or loss from changes in the price of underlying instrument  - tax free.

​ On top of this you do not need to provide the full value of the underlying trade, hence the use of the term leverage.

​ Leverage means you can place the trade with only a marginal amount to keep it open. 

​ If this sounds too good to be true, it is. It's a useful start to have great features in a product but, if not used or looked after properly, a product can cause you bother.

​ This applies to many financial services products, especially when you don't know the ins and outs of them.

​ Fortunately, you're in good hands with most providers becau they give you the educational tools needed to understand the platforms, with tight spreads (cost per trade) and reliable execution. 

​ See City's offerin on the platform providers page for what they have to offer.  ​