Financial spread betting is a form of playing the stock markets without directly investing in equities. This special type of market was invented by a Connecticut-based math teacher by the name of Charles K. McNeil. McNeil went on to actually become a bookmaker in Chicago, but  financial spread betting did not become popular in the United Kingdom until the 1980s.

Potentially, both the risks and rewards are great with financial spread betting because you have the ability to bet on a moving outcome. Simply put, a financial spread bet begins with being offered a bid and offer. If you think the share will go up, you want to buy it for the offer price. If you think it will go down, you'll want to pick the bid price. Your choice will become your trade, and you then simply state how much you are willing to put on that choice.

When you start out, start small. Financial spread betting has many benefits, but most advantage can be gained from those who have at least some knowledge of what they are doing. A beginner may have beginner's luck, but that will be short-lived. Nobody knows for sure what the outcome will be when placing a financial spread bet. Even those in the know are never certain, but your odds increase the more you know the market and what the chances and predictability of the price movement of some companies can be.

Fortunately for those who pick well, earnings in financial spread betting are considered tax-free in the UK. That causes many big players to participate in this market. Benjamin Franklin's famous quote tells us that we can be certain of death and taxes, but this financial spread betting is a unique opportunity to make a lot of money with no tax liability. The futures and options market is remarkably similar to financial spread betting, but the market does come with tax liability.

Whilst the upside on spread bet gains is almost limitless, a trader can request a stop loss - sometimes referred to as simply a stop – which closes a bet immediately if the spread starts to move towards a loss. The same is true of a stop win, also referred to as "taking profit" or a limit order, in that the bet is closed when the spread moves in a traders positive odds by a pre-determined amount. While these options can limit the spontaneity of the trade, it can ensure that the trader does lose all their capital in a worst case scenario.

Financial spread betting works best for those with money to spare. Once money has been earned through financial spread betting, it may be best to diversify some of those winning into savings products. (After all, no later taxes to worry about there.) One should only proceed to do spread bets with the original amount invested. If all winnings aren't re-used, you will be much more cautious and wise with your funds. If the original funds run out, you should ask yourself what you are doing wrong and evaluate if it's worth a higher loss before putting more funds into trading.