Spread betting was invented by a mathematics teacher in the 1940s and was once the mainstay for sports betters.  The principle was based on the idea that there is an active market for both sides of a wager – and in spread betting, the bookmaker evens out the odds for himself by taking wagers on each side of a spread.  He has taken commission and will profit from these.  Thereby, no matter what the outcome, the bookmaker is laughing.

Today, spread betting is joined by Financial Spread Betting, its risky but exciting offshoot.  Financial spread betting is regulated by the FSA in the UK which means it is an official financial instrument, not a betting game.  The investor makes a bet on the direction of an underlying share.  If he guesses right, he wins.  If he guesses wrong, he loses.  Easy as that.  What is added to the risk is that he has paid a margin so this form of trade is based on leverage.  That means you can either make nice wins or devastating losses.  The best thing to do would be to start low and using excess funds!  That means investing a small amount to begin with (although either way if you lose you are liable to pay as much as it takes to cover the loss, often in excess of the original investment) and only use money that you can afford to lose!  If you use money that is needed to pay the bills………..you could end up in some very tricky situations.