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Spread betting future trends

So, what are the future trends for financial spread betting? The markets have developed a long way from their original introduction back in the mid 1970’s and will no doubt continue to do so. Whilst they have their advantages, they also have some disadvantages which we looked at on the previous page, and which I hope provided a balanced view. As I said earlier I have traded both, so perhaps can speak from experience. I enjoy trading both systems, even though they are very different. When I was trading futures, this was all done by phone, with orders executed live on the trading floor on an open line from the broker which was all very exciting. Somehow it made it more real as you could hear the fear and greed in the market as orders were taken and prices quoted. Very stressful for me as a trader since the price I was quoted was always behind that showing on the screen by the time I received a confirmation from the broker. But an excellent way to learn. Nowadays, trading is almost emotion free, and devoid of personal contact which in my view is a backward step ( I sound old!!)

Tax ( or the lack of it) is always seen as the principle argument for the market, and one question I am often asked is whether this is ever likely to change. My own personal view is probably not in the short term, but it is interesting to note that some companies would favour taxation for the simple reason that it adds legitimacy to the market, which in turn adds comfort to the spread betting companies. There are ofcourse problems in regulating and controlling trades, with over 90% now taking place online, but I’m sure Gordon Brown ( who still thinks he’s chancellor), Alastair Darling, or indeed any future chancellor may well consider this as an option, given the parlous state of tax revenue which seems likely in the next few years. The Government is likely to consider anything, and as a growth market, the spread betting industry will be fairly high up on the list or possible targets. So in summary I do not expect this to change immediately, but it would not surprise me to see this happen in the next five years.

Spread betting, like many other trading markets has always tended to be dominated by macho images such as fast cars and planes. It is now generally agreed that in the future, clients are far more likely to be older and increasingly women ( which is good news ) . In the past, women have been conspicuous by their absence, but this is already changing. Those spread betting companies with foresight and imagination are starting to realise that the products they offer, the web sites, the training they provide, and the whole experience of dealing on line has to be designed to appeal to a female audience. Currently women account for around 10% of the spread betting market, and if the growth in other markets is mirrored, then this could grow to 40% or even 50% in the next few years. In order to attract this market, the spread betting companies in general will have to develop more “women friendly” platforms and sites, and in particular provide more women both on the trading desks and also in customer service and support, particularly in the pre-sales environment.

One of the major threats I do see to the spread betting industry is from the betting exchanges who are developing their own platforms and products. The appeal of trading in such an environment which is akin to the futures market, where traders are matched against one another, would seem to me to bring together the best of both worlds. So there we are – now you know as much as I do about financial spread betting. I hope you have found this site to be both interesting, enjoyable, and perhaps even thought provoking. As always my purpose is to try to provide simple and clear explanations on a variety of financial topics to help you become a better trader or investor. I hope I have achieved it with this site. Please remember that this should be the start of your journey, not the end. Practice, learn, and start as small as possible. Success is a profitable trade, no matter the size of the profit, as this will give you confidence to carry on – large losses will not!