I came across an interesting piece of commentary made on the Google Finance site questioning the mechanics behind spread betting.

The comment was posted on the discussion board that sits on the FTSE 100 page.

It was made by someone who is clearly in a similar position as me - someone new to the spread betting scene - and wondering how spread betting companies make their money. Just look how well one of the largest providers, IG Group, is doing.  

His questions echoed a lot of mine, but also brought up some more issues relating to how this burgeoning industry works:

"I've been reading lots of stuff on forums about how spread betting firms make their money.  

"I understood that they take the same position as you in the real market to cover your gains and the little extra in
the spread adds up over all their clients to make their profit.

"Is this the whole story?

"Are their trades automatic from the spread bet software from the client?

"Also, lots of people seem to write about them being not trustworthy.

"Ive been more successful previously by just investing than my more recent spread betting.  Do the spread bet firms cheat somehow? I currently use CMC Markets."

These questions are asked by a lot of people new to spread betting - and from the research I have conducted it is clear that not a lot of information behind the mechanics of spread betting are made available.

Surely if spread betting providers want to gain the trust of their punters they would have answers to such questions?

If you have any answers to the above, please do make a comment.