Do you currently invest? Have you got any money in UK shares? Well if you have then you may want to know a little bit about FTSE spread betting. It is a fairly new method of trading the market. It has its advantages and disadvantages and we will go through some of these now.

The FTSE is the largest index on the London Stock Market. You will hear of it and see it being mentioned in the media. When you a doing FTSE spread betting you are making a bet on the entire index. This means that you need to think about more macro issues and not think too much about the performance of one or two companies.

If you don’t want exposure to the entire index then obviously you shouldn’t be thinking about FTSE spread betting. It is something that you have to be quite focused on. Why not look at owning individual shares or think about having a portfolio that is managed by a professional.

Can a tracker fund be better than FTSE spread betting? Yes and for most people it actually is the best route to take. It is good in that it is a cheap way of investing in the FTSE and at the same time you don’t have to watch it every day.

If buying a tracker fund is a better way to invest for most people then why should they want to try FTSE spread betting? There are many benefits. There is no tax incurred either in profits or stamp duty in the UK. This may be true to trackers on profits if held in an ISA.

Another advantage is that you don’t pay commission on the trade so it means that you can start off small. You can also take advantage of leverage although you need to ensure that you understand the risks before doing so.

You should be speaking to your financial advisor prior to starting FTSE spread betting to make sure you are fully aware of the tax rules. It is important that you understand all the implications of your trading.