What Is Spread Betting?

Spread betting is a type of speculative stock market investing that allows individual investors to place bets on the outcome of real-life events such as sports games, political elections, and world affairs. The bettor places a stake based on their opinion of the upcoming event, and the bookmaker takes a commission from the amount wagered.

Although spread betting is a relatively new form of investment, it has become a popular way for individuals to gain exposure to the stock market and potentially benefit from small gains or large losses without exposing themselves to the risks of full-blown stock market investing. If you’re unfamiliar, here’s a quick overview of what spread betting is and how it works.

Key Differences Between Traditional And Spread Betting

If you’re already familiar with traditional stock market investing, then you’ll know what major differences spread betting has from the traditional method. The most significant difference is the type of bettor used. In traditional investing, only accredited investors can participate, but with spread betting, anyone can apply and get started. In fact, the only requirement is to have an active Facebook account and to be over 18 years old.

The second important difference is the amount of information available about the stock market. In traditional investing, only a few websites provide the information required to analyze the performance of a stock and its ability to generate returns. By comparison, the majority of websites devoted to the stock market exist for the sole purpose of allowing individuals to analyze stock performance and create models to predict the future price movements of a stock. That’s a lot more information available to the average person, which means they stand a better chance of making profitable trades. As a result, traditional investing requires a lot more education and experience to do well.

How Spread Betting Works

In spread betting, you stake your money on the outcome of a sport game, a political election, or a world event. The bookmaker takes a commission from the amount you stake, but you don’t have to worry about paying any additional fees because the site takes care of charging you tax if and when you make a profit. In a nutshell, the bettor lays a wager on an event, and if they’re correct about the outcome then they win the stake and can continue placing more wagers. If they’re wrong, then they lose the stake and are unable to place any more wagers. Essentially, you’re allowing someone else to handle all the the heavy lifting for you so that all you have to do is sit back and relax while you enjoy the ride.

Most Popular Types Of Stocks For Spread Betting

The most popular types of stocks for spread betting are high-performing, well-known companies that consistently produce good earnings and have a stable revenue stream. As a result, these types of stocks are relatively easy to analyze and understand, which makes them popular choices among novice investors who are just getting started or even among experienced investors who want to test the waters of the stock market with a bit off of a gamble. Popular stocks for spread betting include:

  • Netflix: A streaming media company that offers movies, TV shows and original programming for sale. Netflix stocks have increased in value by more than 300% since the beginning of the year 2020. (NYSE: NFLX)
  • Cannondale: A company that manufactures and sells bicycles, parts, and accessories. This company has gone up in value by more than 100% since the beginning of the year 2020. (NYSE: JNJ)
  • Red Ventures: A company in the business of buying and operating retail wine and liquor stores. This company has increased in value by more than 100% since the beginning of the year 2020. (NASDAQ: RVVO)
  • Mountain Dew: An energy drink company that offers a range of products, including juices, soft drinks, and energy shots. This company has increased in value by more than 100% since the beginning of the year 2020. (NYSE: MTD)
  • Tesla: A company that manufactures electric vehicles and accessories. This company has gone up in value by more than 100% since the beginning of the year 2020. (NASDAQ: TSLA)
  • Goldman Sachs: One of the largest investment banks in the world, with a market capitalization of more than $13 billion. This company has increased in value by more than 100% since the beginning of the year 2020. (NYSE: GS)
  • A.P. Green Group: An organic foods and health products company that operates more than 40 grocery stores in the UK. This company has increased in value by more than 100% since the beginning of the year 2020. (LSE: APH)
  • Whiskas: A UK-based pet food and veterinary services company with stores in England and Wales. This company has increased in value by more than 100% since the beginning of the year 2020. (LSE: WSK)

The Bottom Line

Based on the information available, it’s clear that spread betting is a viable way to give stock market exposure to the average person. Even if you’re familiar with traditional investing, there are plenty of benefits to using spread betting, especially if you’re a first-time or occasional investor who wants to gain some experience before diving head-first into the deep end. If you’re looking for a way to lower your risk of loss or gain money at a casino, then spread betting might be the right choice for you.