A man in his thirties placed a buy order with City Index on 5 January to buy gold using a spread bet. The price stood at $350. Each $1 rise in the price of bullion would net him a profit of £20,000. He sold half his position at $380 on 5 February, banking £600,000. He was not the only person to benefit from the surge in the price of gold. Another man bought gold at below $300 and sold out at $350, pocketing £900,000 in the process.
One in the eye for the tax man. By using spread betting you avoid paying the 0.5% stamp duty that you would pay if you purchased actual shares. The money you make from spread betting is also currently free from capital gains tax. Of course always be aware tax rules can change.
Pay as you go. By using spread betting all the costs are included in the spread (i.e. the broker costs and funding).
No short changing. Investors can 'short' and make money when share prices, markets and economies are going down as well as up.
The world is your oyster. Bets can be placed on a complete range of global markets and shares, sectors, commodities and currencies. You can back anything from Microsoft to metals.
Going up a gear. You can gear up or leverage your investment. In other words you only need to put down a fraction of the value of your trade or position. For spread betting if you bet say, £10 per penny movement this is equivalent to trading 1000 shares. In summary you get more bang for your buck.
This means that you can make more by putting down less money, but of course as always it is only fair to point out that you can also lose more.
Emotion. Like all forms of speculating, spread betting can be addictive and the unpredictability of market movements can produce feelings of panic, complacency, euphoria, dejection, infallibility and failure.
Losing streak. As you only have to put up a fraction of your total exposure, be aware that if things do turn against you, you can lose more than your original deposit.
Ignorance. Placing a spread bet is all too easy. But only fools rush in without understanding how to play the game. Unless you know how the system works and you have a carefully prepared plan for success, you will lose.
No get rich quick scheme. Yes, spread betting is a great and cost effective way to trade and take positions, but no they are not the panacea to all your investment ills. If you make bad investment decisions, it doesn't matter what method you use to trade. Always do your research, and don't get carried away.
No perks of the job. You don't pick up the perks of actually owning the shares. For example you will miss out on gorging yourself on tea and chocolate biscuits at a company's annual meeting or getting to vote on shareholder issues.
To sum up, it is important to remember that not every trade is a winner. Any market matches buyers and sellers. If you are buying at a certain price, somebody is willing to sell. You can't both be right. However, don't blame spread betting for this truism. The point is that they are a flexible way to get in and out of the market quickly.
A son stole hundreds of thousands of pounds from his father to pay off his gambling debts then strangled him and dumped him in a car boot, a court heard on Friday the 22nd April 2005.
Gurpreet Dev, 26, passed himself off as a "futures trader", claiming he was earning over a quarter of a million pounds a year through share trading on the internet, the Old Bailey was told.
But in truth he was an inveterate gambler who had lost thousands through internet spread betting, the jury heard.
To cover his debts he began defrauding his parents, borrowing money against the mortgage to the family home where he was living and taking out loans in their name, the court was told. Using these methods he stole over £270,000, said Sir John Nutting QC, prosecuting.
And on October 26 2003 Dev strangled his 59-year old father Harjit before dumping his body in the boot of his car, the court heard. The day before he had looked up the phrases "murder poison" and "murder kill" on the internet, said Sir John.
He told the court that the body lay undiscovered in a nearby road for several months before police found the corpse.
Dev was arrested - and while on remand in Belmarsh concocted a plan with his cellmate Sunhil Whelan, 23, to get off the murder charge, the court heard. The pair planned to bribe a friend of Whelan's to try and pin the blame on someone else.
Sir John told the court: "The case for the Crown is that he strangled his father Harjit at the family home. He placed his father's body into a suitcase and perhaps strangely stored it for several months in the boot of a Ford car until it was found by the police in that vehicle which he had abandoned in a street not far from where the family lived.
"The issue in this case is not whether Harjit Dev was murdered - that is as clear as crystal. The issue is whether we have proved that the defendant did it."
He said that the family lived in Pembroke Road in Seven Kings, Ilford. Along with factory worker Mr Dev were his wife, the defendant Gurpreet, his two sisters, a family friend and a nephew.
Gurpreet was the only member of the household not to have a job and instead tried to make a living by spread betting and playing the stock exchange online, said Sir John.
"He described himself to police as a futures trader and put it about that he was successful and earned a substantial income. He fostered the impression he was in a strong financial position and told one witness from whom he sought employment that he earned a quarter of a million pounds a year.
"Inquiries by police revealed that this picture was far from the truth."
Sir John said that from January 2002 Dev had started to fraudulently borrow money from loan companies and banks, forging his parents' signatures and also those of solicitors.
The court heard that As well as making false loan claims he also borrowed against the mortgage of the home, on one occasion borrowing £150,000 against it. In total he borrowed £277,000 behind his parents backs.
The vast proportion of the money was used to pay off spreadbetting debts which he was still incurring, said Sir John.
He told the jury that there were no witnesses to the killing on October 26, the last day Harjit was seen alive, and added there was no need for a motive to be proved.
But he added: "The Crown points to the financial background as demonstrating three things. Firstly that the defendant had been using his father's name and the security of the family home which belonged to his parents to raise large sums of money without his father's knowledge in order to pay off his own debts.
"Secondly, that as a result of this dishonest conduct the house was encumbered with debts of at least £150,000. Thirdly, despite fraudulently obtaining at least £125,000 in 2002 to settle his betting debts the defendant had accumulated debts of nearly £65,000 by late October 2003.
"How serious his financial plight must have been and what would have been the reaction of Harjit had he discovered the truth can only be imagined."
Sir John said that on the day of the killing Harjit had £3000 in cash on him to pay for building work. This has never been recovered.
And he told the jury that the day before the murder Dev had used Yahoo to make two internet searches - "murder poison" and "murder kill".
Sir John said that there were a number of people in the house on October 26, but Dev managed to strangle his father and hide his body somewhere in the family home.
"He was strangled by this defendant at home in circumstances in which he was unable to put up any significant resistance. His body was thereafter successfully hidden somewhere in that small house and later removed by the defendant in a suitcase to the boot of the car."
After the family realised Harjit had disappeared the alarm was raised. Dev himself joined in searches and even made the official missing persons report to police, said Sir John.
But despite house to house inquiries, posters and publicity in the papers and TV the disappearance remained a mystery, the court heard. Sir John told the jury that less than two months after the killing Dev was claiming to have sold the Ford and had brought himself a BMW 5 series.
Dev was later declared bankrupt.
In March the body was found and Dev was later arrested, said Sir John. He told the jury that while in Belmarsh prison he plotted with Whelan to bribe one of Whelan's friends to make a statement blaming someone else for the killing.
Dev denies murder. He and Whelan, of Woolwich, southeast London, both deny conspiring to pervert the course of justice.
The case continues.
The content of this site is copyright 2016 Financial Spread Betting Ltd. Please contact us if you wish to reproduce any of it.
