How does Spread Betting work?

Spread betting offers you a way of trading a huge variety of global markets without physically owning the instruments, such as a share or commoditise. Because you trade with an element of leverage, you can trade with a small amount of capital and profit from rising or falling markets*(*Leverage may result in larger profits as well as losses).

When you buy a traditional share, you typically approach a broker who finds counterparty who is willing to sell at the price you are willing to buy, then covers off all the relevant issues with regard to registering ownership and settling any exchange fees.

With spread betting you can control what you trade when you want to trade it and can trade a huge range of products beyond the traditional share dealing. In fact, trading indices, commodities and currency pairs are far more popular than standard shares.

When you spread bet you are making a prediction that your chosen product is going to rise or fall. You place a bet on a stake per point movement (say £10 a point of BP shares). If BP goes up 10p you make £100, if it goes down 10p, you lose £100.

It is also worth noting that the flexible nature of spread betting allows you to trade long or short - that is speculate on the price rising or falling, something not possible with traditional share trading.

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Spread Betting, CFDs and Forex may not be suitable for all investors so ensure you fully understand the risks involved, and seek independent advice if necessary. These products are leveraged products and carry a high level of risk to your capital as it is possible to lose more than your initial investment. *Tax laws may change.

For the purposes of trading CFDs and Spread Betting, London South East Limited has introduced you to LSE Spreads, which is a trading name of Spread Co Limited ("Spread Co"), a company registered in England and Wales under registered number: 05614477, with its registered office at 22 Bruton Street, London W1J 6QE, authorised and regulated by the Financial Services Authority (FSA registration number 446677). For the purposes of trading CFDs and Spread Betting, the contract is between you and Spread Co and your account is with Spread Co. All dealing, administration and settlement in relation to your account is undertaken by Spread Co. London South East Limited is an Introducer Appointed Representative of Spread Co.

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