Spread Betting

Spread betting offers traders a chance to speculate on financial markets without actually becoming owners of the underlying security. In layman's terms, investors are betting on whether the asset price will go up or down.

Given that the quote has two prices - bid and ask (with the difference between the two called the spread) - traders bet on whether the asset price will be lower than the bid or higher than the ask. Hence, investors actually only speculate on the direction of the market without taking ownership of the underlying asset. 

In order to better understand spread betting, one must first understand how going long and short works, as well as concepts like leverage and margin.

Go back to our full glossary.