The term 'Spread' refers to the Sell (Bid) and Buy (Offer) price quoted by a spread betting company. The price is worked out by adding additional points around the live (or approximate future) market price of a financial product. For example, if the Daily FTSE is trading at 4729 our quote might be 4727 - 4730.

At Tradefair Spreads, only small deposits are required to open a new position (as little as £10-£40 for a £1 bet depending on the market in question). Once you have chosen a market on which you want to bet, you can then bet your preferred stake. This will represent your profit or loss per point movement in that market (each market has its own individual maximum allowable stake).

You can then bet £1 (or 1 dollar or 1 euro) per point/tick on the movement of the spread prices that we quote. You can then bet on whether that market will rise, or alternatively, you can bet that it will fall. If you are correct in the decision you make, you will make a profit of your original stake multiplied by each point that the market moves in your favour. If you are wrong you make a loss of your stake multiplied by each point it moves away from you.

For this reason, you must be conscious that your losses can increase dramatically if the markets move substantially in the opposite direction to your original bet (for example, if you make a buy bet in the FTSE 100 and instead of going up, it goes down).

All spread betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax.