CFDs are a leverage product and can involve a significant risk of loss. Trading CFDs may not be suitable for all, therefore you should ensure that you understand the risks involved and take into account your individual circumstances.

How Spread Betting Works

Unlike other forms of online trading, Spread Betting doesn’t involve trading lots of currency or a number of shares. Instead, you buy or sell a certain amount of the instrument you are trading. This is referred to as your stake. Your profit or loss is then determined by multiplying your stake by the number of points the market moves.

When Spread Betting, if you think the asset price will rise, you place a buy order (or go long). If you think the price will fall, you place a sell order (or go short). The spread is the difference between the buy and the sell price.

How to Spread Bet

A typical Spread Bet works as follows:

  • 1. Choose an instrument

    Choose from hundreds of instruments across Forex, Shares, Spot Indices, Futures, Spot Metals and Spot Energies.

  • 2. Take your position

    Trade both rising and falling markets. If you think an asset’s price will rise, go long. If you think it will fall, go short.

  • 3. Set your stake

    Decide how much capital to invest per point of market movement.

  • 4. Manage your risk

    Set your stop-loss and take-profit levels to effectively manage your risk.

  • 5. Place your trade

    Place your trade by clicking on either ‘Buy’ or ‘Sell’.

  • 6. Monitor the market

    You can manually close your trade at any time, regardless of your stop-loss and take-profit levels.

Trading CFDs and Spread Bets involves significant risk of loss.

Spread Betting Examples

  • Example A Going Long

    The currency pair EUR/USD is trading at a buy price of 1.11095 and a sell price of 1.11085. You believe that the value of the euro will rise against that of the dollar, so you decide to go long on EUR/USD and set a stake of £5 per point movement at 1.11095.

    The market proceeds to move in your favour and the sell price of EUR/USD rises to 1.11165, so you decide to close your trade. Your profit would be calculated as follows:

    Profit = [1.11165 (sell price) – 1.11095 (buy price)] x 5 (stake)
    This means your total profit from this trade would be equal to £35.
  • Example B Going Short

    Shares in IBM are trading at a sell price of 150.30 and a buy price of 150.68. You anticipate that the value of the shares will decrease, so you decide to go short and set a stake of £2 per point movement at 150.30.

    On this occasion, the market moves against you and the buy price for IBM shares rises to 151.08, so you close your trade. In this situation, your loss would be calculated as follows:

    Loss = [151.08 (buy price) – 150.30 (sell price)] x 2 (stake)
    This means that your total loss from this trade would equal £156.
Trading CFDs and Spread Bets involves significant risk of loss.