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The argument as to the appropriateness of financial spread betting as a way to invest is often up for debate. Indeed, it is merely a form of online gambling – isn’t it? To achieve better insight of the discussion, it is wise to look at the facts. Spread betting is a derivatives instrument proffered by online financial brokers. They provide a platform to anybody who would like to play the market and in essence place bets on financial market movements. Thus, the trader never actually buys the underlying product, and may make returns from retreating markets as much as from rising ones. Spread betting is officially termed as a financial product and is only offered by companies that are governed by the Financial Services Authority. Trading is dependent on margin, just like CFDs trading. In most cases however, spread betting investors are not subject to CGT and regularly commission is not charged. With a relatively small amount of money a trader can commence placing so-called ‘bets’ on a variety of markets. These may include stocks, indices, commodities and currencies.

Bets held by a spread better are never generally open for longer than a day – it is a fast-paced method of making money.Therefore, assuming these basic facts, can we say that spread betting is officially a type of gambling? The answer is “no”. As a completely governed activity, financial spread betting cannot be classed as a type of sport. A spread betting platform provider must abide by a strict set of rules to be able to offer accounts and a base for trade.Indeed, thousands of people who partake in other forms of direct trade, like foreign exchange, indulge in financial spread betting as an extra means to make capital. Yet is it a good means of investment?

Recently, risky speculation on the foreign exchange market has been put in the firing line by lots of ministers and economists who argue that it can bring serious economic financial downturn. A few have even admonished derivatives trading as one of the root causes of the severe recession of 2009. As speculative investors can make money from a falling market, critics have argued that guesswork could become aggressive and out of control – thus bringing the plight of currencies like the euro in recent times.Anyone who does choose to partake in financial spread betting should acquaint themselves with the serious level of risk that is involved. Foreign exchange markets could alter abruptly and without warning, meaning a bet that may have seemed winning moments ago could suddenly switch in the other direction, leaving the trader with significant losses.