Market spread betting is the speculation on a certain financial market. The financial market can be any instrument found on stock exchanges and offered as a spread quote by a spread betting firm. Market spread betting can normally be found on company shares, such as Vodafone, or on a commodity, such as coffee.
Market spread betting doesn’t involve the purchasing or selling of any market, but rather a wager on which direction the market will move. For example, a trader participating in market spread betting on Gold discovers that the price of Gold has been on a decline for a couple of days. The trader believes the price will continue to decrease and therefore places a sell bet on the quoted spread of Gold. This means the investor is betting the market price will continue to decline.
Market spread betting offers investors the opportunity to make profits without the buying or selling of any financial instruments. Although market spread betting involves buy and sell trades, no ownership ever takes place.
Contrary to traditional investing, investors may still profit from low market prices when engaging in market spread betting. This is because the investor is betting on which way the market price will move either up or down.