Trading Spreads

Spread betting began back in the 1970’s in the UK city of London by a man called Stuart Wheeler. Stuart Wheeler developed the concept of spread betting through offering buy and sell bets to his friends on the future price of gold.

Back in the 1970’s gold was a very difficult commodity to speculate on. Each week in London a group of top London bankers would gather to set a price for gold. The price they set would be the price gold would be traded at for the following week. Stuart Wheeler began by creating a sell price and buy price for gold and allowing his friends to speculate whether the price of gold would increase or decrease at the next gold price setting.

News of Wheelers gold offerings circulated around London. As the popularity of spread betting the future price of gold grew Wheeler open a company called the ‘Gold Investors Index’. The name was frowned up by the Bank of England and changed to what is known today as the ‘IG Index’

Spotting an opportunity through the increased interest of financial professionals in London to speculate on the movement of financial instruments Wheeler introduced a range of spread betting products. These products included commodities, indices and currencies. Gold remained the instrument of choice for many traders, when the gold boom started in the late 70’s word of fortunes been won and lost quickly spread around the city of London.

The IG index remained the sole spread betting firm for several years until City Index and Sporting Index got in on the action. By the 1980’s the popularity of spread betting was at its peak but still a relatively small operation only used by financial professionals. The general public were generally unaware of the markets been traded so avoided investing in financial spreads.

The 1980’s saw continual growth of the spread betting phenomenon but lack of technology and the unwillingness of private investors to bet on the instruments offered restrained growth until the 1990’s.

With the 1990’s came the introduction of the internet. The spread betting companies were quick to spot the opportunity to offer professionals and private investor’s access to real time spreads. Spread betting was now easier than ever to get in to, prices were constantly updated and trades could be quickly opened and closed. This new technology and ease of use brought the private investors in on the game. Spread betting began to gain momentum again and financial spread betting grew offering bets on just about every financial instrument available.