A good way of losing thousands of Euros in double quick time by backing financial or sports markets to either rise or fall. You bet a (relatively) small amount per point of the index which can fluctuate by hundreds (or if you are (un)lucky thousands) of points within a few weeks. On the plus side, you can open and close your bet at any time - sometimes you might open a position which you could hold on to for as long as 3 or 4 months. If there is rapid activity in your favoured direction, you might get out within hours and take a small profit.
Two examples of spread betting:
1. Dow Jones 'March 2007' might have a spread as follows 11200-11215. If you think the market will go up you buy at 215 hoping it will end anywhere higher than this. If conversely you think that the market will go back into the 10,000s you 'Sell' and wait for the market to fall before closing your position.
2. Cricket bet. England 2nd innings of the 4th Test vs Pakistan. The spread might be something like 295-305. If you think England will score 400+ you might buy this position at 1 Euro per run. If they score 405 you win 100 Euros.
1. Dow Jones 'March 2007' might have a spread as follows 11200-11215. If you think the market will go up you buy at 215 hoping it will end anywhere higher than this. If conversely you think that the market will go back into the 10,000s you 'Sell' and wait for the market to fall before closing your position.
2. Cricket bet. England 2nd innings of the 4th Test vs Pakistan. The spread might be something like 295-305. If you think England will score 400+ you might buy this position at 1 Euro per run. If they score 405 you win 100 Euros.
by Jonathan FeBland (Znethru) August 18, 2006