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The discussion as to the suitability of financial spread betting as a means to invest is frequently debated. After all, it is just a type of online gambling – isn’t it? To achieve better insight of the argument, it is sensible to examine the hard truth. Spread betting is a derivatives instrument proffered by online financial brokers.

They provide a platform to anybody who wishes to speculate and effectively guess on financial market movements. As such, the trader never actually purchases the underlying product, and may make returns from falling markets just the same as from rising ones. Spread betting is officially termed as a financial product and is only offered by brokers that are governed by the Financial Services Authority. Trading is dependent on margin, just like CFDs trading. In the majority of cases however, spread betting investors don’t pay CGT and regularly commission is not charged. With a relatively small amount of capital an investor can start placing so-called ‘bets’ on a range of markets. These may include stocks, indices, commodities and currencies.

Positions opened by a trader are never usually open for longer than 24 hours – it is a fast-paced means of trade.Thus, assuming these basic facts, can we conclude that spread betting is really a form of gambling? The answer is “no”. As a fully governed activity, financial spread betting cannot be classed as a form of gambling. A spread betting platform provider must abide by a strict set of rules to be able to offer accounts and a platform for trade.In fact, thousands of investors who partake in other versions of online investment, like forex, partake in financial spread betting as an extra means to make capital. Yet is it a recommended means of investment

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Recently, risky speculation on the foreign exchange financial market has been placed in the spotlight by many authorities and financial analysts who argue that it may drive severe economic problems. A few have even admonished derivatives trading as one of the root causes of the severe downturn of 2009. As speculative investors are able to make money from a retreating market, critics have argued that risk-taking could become aggressive and out of control – thus bringing the problems of currencies such as the euro in the last few months.Anyone who does choose to partake in financial spread betting must acquaint themselves with the high amount of risk that is involved. Foreign exchange markets may change abruptly and unpredictably, meaning a bet that might have appeared to be winning just now can suddenly turn the other way, resulting in heavy loss for the trader.