Special report: Spreadbetting – a beginner's guide
The following is an extract from this special report: 
Spreadbetting can be fun, fast-paced and a great way to boost your profits. But it can also be dangerous for the unwary. Place an open upbet on the FTSE 100 at £50 per point, for example, and you could lose hundreds of pounds very quickly should the market fall. So here are some simple precautions.
First, do your homework. Many more people lose than win – that’s how brokers make their money after all – so improve your odds by doing some research. MoneyWeek readers can get the latest news and views on a host of different markets.
Next, limit your losses. On a spreadbet you can do this using 'stop-losses' to cap the amount you lose should a bet backfire. Ask your broker about these and, since you will pay a little more for one, get a price upfront. Or consider fixed-odds betting (page 13). With this type of bet you can only lose your original stake – pretty bad, but better than losing more, which is perfectly possible with conventional spreadbets and contracts for difference (page 16).
Finally, just as no one becomes a half-decent tennis or football player without hours of practice, so any budding spreadbetter should spend time on their broker’s website trying out bets using dummy accounts. Even when you go live, don't get lulled into making crazy bets based on a few initial successes. Also, be honest and cut losing bets quickly – in short, forget personal pride and focus on profits.
