That is not to say you should restrict your trading to spread betting, however, but it is worth considering as part of your investment portfolio. For example, you might trade shares and want to hedge some of the risk. Spread betting provides a way of letting you do this. One method is to spread bet on shares to go down, this is also known as ’shorting’.

You can trade gold and oil as well as Indices such as the FTSE 100, Dax 30 and Dow Jones. You can also spread bet on shares from the UK, USA, Ireland, India etc. You even trade forex rates including Euro/Yen, Pound/Euro, US Dollar/ Australian Dollar etc.

Spread bets have emerged as an enabler for people who want to explore the capital markets via non traditional routes. It allows you to be actively involved in the financial markets without actually taking any physical possession of commodities, there are no share certificates and no large foreign currency holdings.

Another method of reducing your risk is to employ a ‘Guaranteed Stop loss’. This is a process whereby, if your spread bet is going against you, an automatic trade is triggered when the market breaches a predetermined level. This will close your trade and ensure you do not lose any more money even if the market continues to move against you.

Do note though that you can lose more than your initial investment or stake. Spread bets may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.