A similar idea is to look for arbitrage opportunities. Now you may become excited by the prospect set out here, that you can make money with zero risk, so I should warn you that it is rare you will find such a chance and it wont be open long. But its worth knowing about so you can jump quickly if it arises.

Arbitrage is defined as the near simultaneous buying and selling of something in different markets to take advantage of a difference in pricing. Although the words origin is Latin, via French, its only been in use for a couple of centuries. I first came across it in eBay, where it was suggested as a way to make money – finding obscure, cluttered, mis-spelt or otherwise disadvantaged listings of items, where you could expect to pay less than the real market price, and re-listing them straight away, using the best copy-writing techniques to sell at a higher price.

In the context of financial dealings, arbitrage can be a high tech powered device, with large investment companies using computers to search the different markets for any discrepancies that can be exploited. A minute price difference can be amplified by using the large sums of money that these companies typically have access to.

For our purposes, spread betting firms fix their own prices which are loosely based on the underlying securities. They are usually in line across different providers, as betters taking advantage of arbitrage would rapidly alert them to the fact if they were not. But sometimes, particularly in volatile markets, you may find that different bookmakers are slow to keep up, and you can exercise arbitrage.

Say for example that we were looking at the UK 100 Rolling Daily, where Capital Spreads were offering 5888.0 – 5889.0, that is you can sell or go short at 5888.0 or buy a long position at 5889.0. If you also had an account at another spread betting provider, but they were quoting 5894.0 – 5895.0, congratulations, you have found an arbitrage opportunity!

You would now place a long bet with Capital Spreads, which would be at 5889.0, and place a down or short bet with the other company at 5894.0. You are now covered, you have cancelled out your bets and cannot lose wherever the market goes. Once it all settles down, you will probably find that the anomaly is corrected and they both start quoting the same prices. To keep it simple, well assume that the prices offered by Capital Spreads dont change, and your other bookmaker revises to suit.

Once again, you need to do two transactions virtually simultaneously in order to avoid any effect of the market moving. You would sell at Capital Spreads for 5888.0, losing a point – the spread, and you would close out your second bet at 5889.0 for a gain of 5 points. A safe 4 point gain for zero risk. You wont find enough opportunities for arbitrage to make a decent income, and given the speed of the bookmakers computers you may not even find any, but it is a recognised strategy.