Spread betting’s secret weapon

Tim Bennett explains how you can magnify your spread betting profits through 'gearing'.

Wondering why you should dip a toe into the world of spread betting? After all, if you think share prices will rise, why not just buy shares and have done with it? Well, one of the answers as to why spread betting can be better is gearing. So, what is it and why is it such a powerful tool in the right hands (and something of a catastrophe in the wrong ones)?

Gearing or 'leverage' is the ability to place a large bet with a small outlay. That magnifies normal profits and losses on a trade.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.