If you want to play with the big boys on the financial markets, the rewards can be great, but so can the liabilities. ADVFN's Clem Chambers advises how to spread bet profitably, use leverage to your advantage, and make big money.



While it may not seem obvious, a spread bet is, in fact, a type of derivative trading. A spread betting company is essentially a business offering a user-friendly interface to speculation in derivatives.



For example, a trader may think that the FTSE 100 is about to go up. He could open a Liffe trading account and buy a contract. However that contract would involve him making a £50,000 bet on the direction of the FTSE 100, because that is the minimum size of a FTSE 100 Liffe contract.



A spread betting company, however, will allow you to put a much smaller bet on the FTSE 100 because it can roll up all the exposure to these gambles in a batch and then lay this off by buying the large Liffe contract on the Liffe market.