We no longer check to see whether Telegraph. To see our content at its best we recommend upgrading if you wish to continue using IE or using another browser such as Firefox, Safari or Google Chrome. As markets are still being buffeted by the fallout of the credit crisis, some 'investors' are still minting it. Making money in falling markets is something that hundreds of thousands of people are now achieving through spread-betting, but it is not without risk, even though you can limit your exposure to a loss.

This form of gambling has come to the fore in the last five years, and after initially being the preserve of City hot-shots, everyone from teachers, doctors, lawyers and students are now getting involved, and making money. Tom Ryan, Director of Barclays Stockbrokers says: According to our recent research, 17 per cent of active investors are now using spread betting platforms.

During a volatile October we saw our busiest trading month ever for CFDs. But how does this form of gambling differ from trotting into the bookies and putting some cash on the gee-gees? Spread-betting is not a simple concept to grasp, but rather like driving a car, once you have understood it and put it into practice, it becomes infinitely easier. Essentially, the bookie that you are dealing with will offer you a "spread" rather than fixed odds that you would get in more traditional betting.

So, for example, a traditional bookie may give you on Vodafone's shares going up by 5 per cent, which means you will get a fixed return no matter how much higher the shares actually went. With spread betting, the more "right" you are, the more you win.

But it works the other way too, and the more wrong you are, the more you lose. Yep, it can be confusing, but stick with it, it is not that bad really. Take an example of someone who is betting on which way the FTSE is going to go. Now, if you wanted to make a bet with a spread bookie on the FTSE on which way it was going to go, you would be offered a spread of perhaps 6, to 6, You have to make a decision on whether you think the FTSE is going to rise or fall. If you think it is going to rise, then you "buy" the index at 6, If you think it will fall, then you "sell" the FTSE at 6, These terms may seem confusing for now, but all will become clear.

If you agree to "buy" at 6, and the FTSE goes up by points, to 6,, then you may decide to close your bet and "sell" the FTSE at the higher level.

If you think the FTSE will fall, then you would take the other option and "sell" at 6, If the FTSE fell by points to 6, and you wanted to close your bet, then you would "buy" at the lower level.

Well, that is when more than your head will hurt, your wallet will pinch too. But instead of it rising, you actually watch the FTSE fall by points to 6, It works the same in reverse if you guess it will fall and it rises, which may feel slightly ironic to regular investors.

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Yes, you can introduce a guaranteed stop loss on your bet, which means you can determine the most you can lose if the bet goes against you. IG Index, for example, will allow you a minimum stop loss of 12 points on a FTSE bet. No, far from it. You can bet on individual shares, sectors, indices, currencies, gold, not to mention sports and even the X-Factor.

It might be the only time you could fancy Simon Cowell. There is no time limit on a spread bet. You decide when you want to cash in depending on the position you are in. If you find that after an hour of having the bet you have made a lot of money, you may want that in your pocket rather than being risked further in the gamble, so you can close your position and get your payout.

Or, if the markets are working against you, you may be able to hold your nerve and keep the money on the line for longer in the hope that your fortunes turn. It is a big risk, but by using a stop loss it can be a calculated one. IG Index even has a facility for those new to spread betting which for the first six weeks allows them to play with pennies rather than pounds, so you can bet as little as 10p a point on some indices.

But the minimums will rise after this period. No, as it is a bet, any winnings you get are tax free. The only type of similar gamble on which you would face capital gains tax CGT is a contract for difference; they work in much the same way, but gains on these are subject to CGT.

That may sound unattractive, but if you make a loss on a CFD and you have made taxable gains elsewhere, then you can offset these losses against those gains and get a tax advantage. The FSA is proposing that CFDs are governed by "greater disclosure" and has outlined that it may require disclosure to the market of any CFDs written in reference to more than 3 per cent of a company's stock, unless "the CFD holder could not exercise or seek to exercise voting rights and had made a clear statement to that effect".

In addition, they could not have "arrangements or understandings in relation to the potential sale of the underlying shares by the CFD holder".

Companies, under the proposed rules, would also be able to request a notification if a CFD holder had interest in 5 per cent or more of the company's shares, regardless of these so-called "safe harbours".

However, thankfully, for most people this is unlikely to arise as an issue. If you want to spread bet, you need to set up an account with the spread betting company you are interested in dealing with. There are a number of them in the City, Cantor Index, IG Index, City Index - some are subsidiaries of others too, such as Financial Spreads — so make sure you do a bit of research to bet with the one you want.

IG Index is the biggest. Depending on how you use your account, you may need to provide proof of assets to cover your bets, but this will depend on the company you bet with. It will take a few days to a week to set up an account. Once your account is up and running, you can make your bets online or over the phone depending on your preferred route, or a combination of the two. The companies that offer spread-betting are regulated by the Financial Services Authority, just like most other financial institutions, so you can be reassured that someone is looking over their shoulder to make sure they are running their affairs in good order and, at the very least, customers are being treated fairly.

However, no amount of regulation will help you if you get your bets wrong, so in that respect there is no doubt it is risky, and you should make sure you know what you are doing before you get involved.

But all bar one of them gave it back through other bets. So yes, there is money to be made, but whether you will and whether you hang on to it if you do remains to be seen. She will be giving weekly updates on her progress at here and we will keep you up-to-date through our printed pages too.

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Now he eagerly awaits royalty cheques. Paul Daniels wasted too much on Ferraris but has made a fortune on his home - despite the flood. Following George Osborne's announcement of the Budget, The Telegraph looks at the numbers on the UK's economy and financial health. George Osborne should simply abandon changes that will reduce incentives to save and create yet more uncertainty.

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Kyle Caldwell My five investment resolutions for Richard Evans Bank security: James Anderson This is why I'm worried for investors in the FTSE Is spread-betting a gamble? It sounds confusing - how does it work? Say the FTSE closed at 6, Blimey, my head hurts.

How do the spread betting companies make their money?

What about if I guess wrong and it goes against me? That is a lot of money for me, is there any way that I can keep my losses to a minimum? Can I only bet on indices? OK, I'm coming around to this now. How long does the bet last? Do I have to bet a lot of money to get involved in this? Do I pay tax on the money?

How do I get involved then? Can I really make a lot of money at this? The kitchen coup — how cash shifted the balance of power over household chores. The inspector calls — and house prices jump. How the Ofsted effect could add thousands to the value of your house or send it sliding.

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