1. Get leveraged exposure to the market – investors get a lot of exposure for relatively little outlay, which means the potential rewards are big, but so are the potential losses.

2. Bet on a falling market – with conventional investments, it is usually only possible to bet that a market may rise, which isn’t all that useful when prices are sliding. Spread betting allows investors to bet that the price of an asset is going to fall as well as rise.

3. Hedge a position – If an investor is worried about, say, their exposure to the FTSE 100 index in the short-term, but still wants to hold the asset in the long-term, they are unlikely to want to incur the costs or hassle of selling all the holdings in their main portfolio. In this case, they can simply take a short-term spread-betting position that allows them to profit from any falls in the market.

4. Take short-term positions – Usually the cost and hassle of moving in and out of unit trusts or conventional stocks and shares means that investors are better off holding their investments for the longer-term. Spread-betting allows investors to take shorter-term positions.

5. Avoid stamp duty – because spread-betting is defined as ‘gambling’ investors do not have to pay stamp duty. They will have to pay a deposit when they open the trade and may also have to make interim payments or ‘margin’ while the trade is open.

6. Access a wide range of asset classes – it is possible to take positions on many major stocks, indices, currencies and commodities.