At heart, the best traders are bookies: ready to give you a price on almost anything and careful to spread the risk around so that no one event can leave you destitute if you've managed to misprice the odds, writes Sheila O'Flanagan

And no matter how complicated the trade mechanism, the bottom line is that you are making a bet on a particular market - interest rates, currency movements, precious metals or oil. Your view and competing views are what drive prices up and down.

The market mantra is, of course, that "the trend is your friend", telling you that, no matter what you personally believe, there is a huge constituency of people out there with a particular opinion and that opinion could become self-fulfilling. Which is what happens in bubbles and in meltdowns and any other extreme market moves.

We all like watching trends, even though we may not put our money where our mouths are; but dealers love to see new markets opening up for the sheer joy of having a bet on something different.

And while professional traders make their bets on the potential action of the Fed by buying and selling US government paper, others can cut their teeth on the Iowa electronic markets - the Federal Reserve monetary policy market which allows you to trade contracts based on the monetary policy decisions of the Federal Open Market Committee at its regular meetings by logging on to www.biz.uiowa.edu or, closer to home, Tradesports www.tradesports. com, which is based in Dublin and offers a range of esoteric contracts for your trading enjoyment.

The Fed contracts, for example, represent the decisions that can be taken regarding the Fed funds target - raise it, lower it or leave it unchanged.

The market, which is being operated by the University of Iowa, is a not-for-profit venture so we're not exactly talking millions of greenbacks here.

It was set up for research and teaching purposes. The students learn about trading by actually having a go at it, while the university's business college researches market and trader behaviour.

Trading accounts can be opened for anywhere between $5 (€4) and $500 and participants use their funds to buy and sell contracts. It comes under the supervision of the Commodity Futures Trading Commission, although not technically regulated in the same way as "real" markets.

Tradesports is a more commercial outfit and, as such, is completely for profit, but you can still trade happily in the contract of your choice for a mere fistful of dollars. Currently neither market has many punters betting on a Fed funds change so it's not a contract on fire with competing trades.

The Iowa contracts aren't limited to Fed funds, of course. In its capacity as an instructor in initiating a new generation of traders into making and losing money, it also offers a variety of other markets, including a computer industry returns market (which uses one-month relative common stock and index returns) as well as a Microsoft price level market.

The contracts are placed in circulation by traders by purchasing unit portfolios from the Iowa Electronic Market. The price at which the portfolios can be bought or redeemed is determined by the sum of the liquidation values of all the contracts in the portfolio.

Maybe unsurprisingly among the student population, the computer industry returns market is very popular.

Tradesports, in its capacity as an outfit that was set up by traders and, therefore, probably would make a market in two flies crawling up a wall, can offer you contracts on when you think Osama bin Laden might be captured (or neutralised!).

Tradesports was also offering contracts on the guilt or innocence of Martha Stewart and Michael Jackson, as well as dealing in a whole heap of sporting events (some of which are clearly aimed at the US market).

But the market that's been buzzing along for both online trading operations is the US presidential election market - and there's another eight months to go! Initially, when the Democratic race began, the University of Iowa offered pairs of contracts representing Bush against each of five possible Democratic candidates.

With John Kerry now the contender, all of the other contracts expire worthless. You can see how that has happened if you look at the website graphs of each contract.

Back in December, Howard Dean had rocketed to $0.51 (probably well supported by all those techno-types who logged on for him and who are now left long of Deany babies - a possible secondary market there, I think!) while Kerry was trading at $0.05. Now Kerry is trading at $0.48 and Dean's contract has expired.

The market only operates on Democratic and Republican party candidates, so you can't buy a Ralph Nader contract in a moment of mad passion for an outsider.

Tradesports is offering a Bush versus Democrat contender contract too. Interestingly, the players on the Tradesports market are more confident about a Bush win than those on the possibly more Democrat-leaning Iowa campus, which makes one wonder about the potential arbitrage opportunities that could be exploited.

One of the big things about trading in any market is that any pricing inconsistencies soon get eliminated as savvy traders rush to cash in on risk-free returns.

If Dubya begins to feel under pressure himself, maybe he should go short at the higher level on Tradesports and buy himself back on Iowa. He might lose the race for the White House but at least he'd know that his support for capitalism was paying him back in hard cash - although maybe not in the kind of amounts he's used to.