Financial spread betting is based on a simple concept. If you
think that a certain financial market or product will rise in
value, then you buy the product. If you think that a certain
financial market or product will fall in value, then you sell
it.
Once you have bought a financial market or product that you
believe will rise in value, then in due course, if your
prediction is correct, you can sell the market or product for
a profit. (If you are incorrect and the value falls, you make
a loss.)
Once you have sold a financial market or product that you
believe will fall in value, then in due course, if your
prediction is correct, you can buy the market or product back
at a lower price, for a profit. (If you are incorrect and the
value rises, you make a loss.)
The spread is the difference between the buying and selling
price of a financial market or product. It represents the
market-maker's potential profit or loss on a transaction.
If you think that the FTSE 100 will rise in value, then you
request a price via the Internet. The trader will give you the
spread, e.g. 5800 - 5802 points. You then you buy at 5802 for
an amount (say £2) per point movement*.
A week later if the price had moved up to 5852 - 5854 and you
then sell at 5852, you would realise a point profit of: 5802
(entry buy price) - 5852 (exit sell price) = 50 points. As you
have placed a trade of £2 per point, you would make a profit
of £100 (£2 multiplied by 50).
* You decide on the amount, based upon Finspreads' bet size
range and the deposit you have available.
To limit your trading risk, we recommend that you place a stop
loss when you open a new position. This will help protect you
if the price moves against you. For a small charge (debited
from your cash balance), you can guarantee your stop loss to
eliminate the risk of slippage or market gaps.
A "guaranteed" stop loss will ensure that this price is
guaranteed even if the underlying price moves through your
stop loss level. Learn more about orders.
Financial spread betting is an efficient, tax-free alternative
to share trading with a traditional broker. It allows you to
trade on share price movements, while avoiding any brokerage
fees or commissions.
UK shares - FTSE 100, FTSE 250, and any other UK company
depending on its size and liquidity.
American shares - we quote around 500 US shares, including the
30 Dow Jones stocks and a large number of NASDAQ 100 and S&P
500 shares.
European shares - we quote the top stocks from Germany,
Holland, Italy, Spain, France and Switzerland. |
