There are now over 20 spread betting providers in the UK, and fierce competition has driven spreads down. A decade ago, the spread on a benchmark index such as the FTSE 100 index was around 10 points. Today it has fallen to around two. Consolidation rumours are constant, but most believe that the market is growing sufficiently to support this number of providers.

Over 400,000 people in the UK have a spread betting account, and the majority of the traders, currently, are male. Spread betters tend to be self employed individuals or those working in the IT and finance and insurance sectors.

Spread betting appeals to the same kind of market as CFDs, namely experienced traders, active in the market who understand the risks associated with margins and gearing. Much of spread betting consists of short-term trades, volume-based, high volume day traders coming in and out of positions. Read more about our findings here

Experienced traders all spread bet for the simple reason that if they can make £10,000 from spread betting, then they can keep £10,000 spread betting, rather than handing over a significant proportion of it to the taxman.

I am going to be 100% honest with you. I don't want you to think that at any point you have been mislead at all. I want you to read and be aware of the following before we go any further:

You will lose money as well as make it. Most professional traders will make on average 6 loss making trades out of 10. The important thing to remember is that the 4 winning trades make much more money than your losses.

Financial trading is not for the unemployed, anyone on a low income, who can't afford to live - let alone afford to invest in their future as regards Financial Trading. You need at least £100 to start trading - money which you can afford to lose and is not 'ear marked' for anything. This is for serious people who are willing to take a small calculated risk, not for the shy or weak - no complaining or writing to TV programs should you lose your money.

Financial Trading is 'Highly Geared' - you can win and lose money quickly. The good news is that there has to be those that lose and those that win. This is a 'Zero Sum' game - the money you will make has to come from somewhere.

Note that if you're an American you cannot participate in financial spread betting (unless you create an offshore company) because sites like Capital Spreads are highly regulated by the British Government (specifically, the FSA) which does not allow these sites to violate the U.S. laws prohibiting Americans from trading derivatives outside the U.S. Yes that's right...you're the only western industrialized nation that prohibits its supposedly 'free' citizens from speculating with your money offshore as you see fit. Call it protectionism by the CFTC, call it 'big brother,' call it whatever you like; it isn't right. If you are from the US you simply have to consider taxes as a type of 'slippage' that you as a trader in the States need to overcome with better 'edges'...

Holy Grail

I do not think there is a secret for how to make money on the stocks, you have to find a good strategy and then stick with it, and not overrule it (because then you are no longer following your strategy). Its OK to develop and tweak the strategy as you gain more experience, but the fundamental strategy should remain the same.

So Where can I Spread Bet?

There are a number of established spread betting companies in the UK and Europe, backed by fairly reputable and large bookmakers. You may need a local mailing address in order to open an account with them. The most popular include Capital Spreads, IG Index, Financial Spreads, City Index, CMC Markets and Cantor Index.

TradIndex

IG Index

Financial Spreads

City Index

CMC Spreadbet

Cantor Index

Capital Spreads

Capital Spreads is a division of London Capital Group and authorised and regulated by the Financial Services Authority (FSA) [as with all spread betting companies offering their services to UK clients]. The company is also a member of the London Stock Exchange, LIFFE, Eurex, Deutsche Borse, Paris Bourse and Euronext.

If you are new to spread betting you can try the trading simulator at Capital Spreads, and if you are interested can open an account online within minutes with a minimum deposit. The company aims to provide better-value bets and speedier transactions. Spread bets are on major indices, foreign exchange, commodities, bonds, interest rates and individual shares, and stop loss and limit orders can be entered. Capital Spreads' unique computer-generated customer account management system (CAMS), helps you control the margin on your account, so any losses will be limited to the original deposit made when you open your position.

The company is a recent start-up but already looks promising with its impeccable customer service and tight spreads.