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How to Spread Bet

At ETX Capital you can spread bet on thousands of markets, which include bonds, commodities, currencies, equities and indices.

Traders can choose to buy in these markets if they feel that the price will rise, or alternatively sell if they believe that the market is due to drop, with profits or losses determined by the rate of movement and the direction that the market moves.



One of the advantages of spread betting over traditional trading is that you don’t actually have to buy the product. Instead you trade on the movement within a market and how it correlates to the size of the spread.

As an example, let us assume that I want to trade Facebook stock which is hypothetically trading at a bid/ask price of 7830.2/7845.6. If I buy Facebook shares I will do so at a price of 7845.6, while if I sell the value will be 7830.2.

In spread betting the trade is determined by the price of the stock but the spread, which is the difference between the buy and sell values. The difference between the buy price of 7845.6 and the sell level of 7830.2 is 15.4 - the size of the spread.

I can then choose how much I want to trade per point. If I go for a £1 a point and buy at 7845.6, I’ll begin with an £15.40 deficit. In order to make a profit, I’ll need the sell price of the shares to increase by over 15.4 points to 7845.7 or more.

Say for example that the Facebook stock sell price moves up to 7850.2. Having risen upwards by 20 points, the sell price is now 4.6 points higher than when I bought it. I can sell to lock in a profit of £4.60.

Should however, Facebook’s share price have fallen to leave the sell price at 7810.2, it would now be 20 points below the original deficit of 15.4. This would make the sell price a total of 35.4 points beneath the level at which I bought, which means I would lose £35.40 should I sell.

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