The Concept of Spread Betting
Financial spread betting is based on a simple concept. If you think that an underlying instrument will rise in value, then you ‘buy’ it (known as going ‘long’). Conversely, if you think that it will fall in value, then you ‘sell’ it (go ‘short’). However, unlike full value trading where you actually take possession of the underlying instrument, with financial spread betting you are simply taking a position that allows you to speculate on movements in its price.
How does it work?
Rather than buying the investment directly, you bet an amount on each point or 'penny' that its price moves. As the price moves, your profit or loss is simply the price movement multiplied by your stake. You can see how this works in our Trading Examples section.
As with traditional share dealing, you will be quoted two prices on an instrument that you choose to trade. The lower of the two prices is called the ‘bid’, and is the price that you will receive if you sell. The higher of the two prices is the ‘offer’ and is the price you will pay if you buy. The difference between these two prices is known as the ‘spread’, and represents the cost of trading.
For example, if the UK 100 dfts has a quote of 6134 Bid / 6136 Offer, you could either Buy at 6136 if you think that the UK 100 index will rise, or Sell at 6134 points if you thought the index would fall.
Margin
Spread betting is a margined product, which means you only need to deposit a small percentage of the full value of your trade in order to open a position. This deposit is known as ‘margin’ and varies between instruments, but can be as low as five per cent of the total value of your position. More detail can be found on our Spreads and Margins page, and in the Finspreads Market Information Sheets. Note that this leverage can result in losses quickly exceeding an initial outlay, so please ensure that you fully understand the risks involved.
Access to global markets
Spread betting gives you the ability to trade on the movement of thousands of instruments across the world's financial markets from a single account. You can speculate on price movements of equities, indices, currencies, commodities and many other financial products.
Full details of our markets can be found in our Markets section, and in the Finspreads Market Information Sheets.
Please remember spread betting is leveraged and can result in losses quickly exceeding an initial outlay. It’s not suitable for everyone and you should make sure you fully understand the risks involved. If you have any doubt, please seek independent advice.
How does it work?
Rather than buying the investment directly, you bet an amount on each point or 'penny' that its price moves. As the price moves, your profit or loss is simply the price movement multiplied by your stake. You can see how this works in our Trading Examples section.
As with traditional share dealing, you will be quoted two prices on an instrument that you choose to trade. The lower of the two prices is called the ‘bid’, and is the price that you will receive if you sell. The higher of the two prices is the ‘offer’ and is the price you will pay if you buy. The difference between these two prices is known as the ‘spread’, and represents the cost of trading.
For example, if the UK 100 dfts has a quote of 6134 Bid / 6136 Offer, you could either Buy at 6136 if you think that the UK 100 index will rise, or Sell at 6134 points if you thought the index would fall.
Margin
Spread betting is a margined product, which means you only need to deposit a small percentage of the full value of your trade in order to open a position. This deposit is known as ‘margin’ and varies between instruments, but can be as low as five per cent of the total value of your position. More detail can be found on our Spreads and Margins page, and in the Finspreads Market Information Sheets. Note that this leverage can result in losses quickly exceeding an initial outlay, so please ensure that you fully understand the risks involved.
Access to global markets
Spread betting gives you the ability to trade on the movement of thousands of instruments across the world's financial markets from a single account. You can speculate on price movements of equities, indices, currencies, commodities and many other financial products.
Full details of our markets can be found in our Markets section, and in the Finspreads Market Information Sheets.
Please remember spread betting is leveraged and can result in losses quickly exceeding an initial outlay. It’s not suitable for everyone and you should make sure you fully understand the risks involved. If you have any doubt, please seek independent advice.