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The discussion as to the appropriateness of financial spread betting as a way to invest is frequently debated. After all, it is just a type of internet gambling – isn’t it? To get better insight of the argument, it is a good idea to study the facts. Spread betting is a derivatives product provided by online financial broking firms. They offer a platform to anybody who wishes to take a chance and in essence guess on financial market fluctuations. Thus, the trader never really purchases the underlying product, and may make capital from falling markets as much as from rising ones. Spread betting is technically termed as a financial product and is only offered by brokers that are governed by the Financial Services Authority. Trading is dependent on margin, similarly to CFDs trading. In the majority of cases however, spread betting traders are not subject to CGT and often commission is not charged. With a comparatively small amount of funds a trader can begin placing so-called ‘bets’ on a range of markets. These can include stocks, indices, commodities and currencies.

Bets opened by a trader are never usually open for longer than 24 hours – it is a fast-paced means of trade.Thus, given these elementary facts, can we conclude that spread betting is truly a form of gambling? The answer is “no”. As a completely governed activity, financial spread betting cannot be categorized as a type of sport. A spread betting platform provider must adhere to a strict code of conduct to be able to offer accounts and a place to trade.In fact, many individuals who partake in other forms of direct trade, such as foreign exchange, partake in financial spread betting as an added way to make profit. But is it a good way to invest?

In recent times, risky speculation on the foreign exchange market has been placed in the spotlight by lots of ministers and financial analysts who argue that it may bring serious economic financial fallout. Some have even blamed derivatives trading as one of the root causes of the severe recession of 2009. Because traders may make money from a falling market, critics have reasoned that speculation may end up aggressive and out of control – thus driving the problems of currencies like the euro in the last few months.Anyone who does decide to partake in financial spread betting should acquaint themselves with the high amount of risk that is involved. Foreign exchange markets can change suddenly and unexpectedly, meaning a bet that may have seemed winning moments ago can suddenly turn the other way, resulting in heavy loss for the trader.