A Guide to Spread Betting on the FTSE 100
|
|
|
When you look around the internet there are numerous get rich quick sites. A good number of these focus on the financial markets, be it the currency markets or penny stocks and shares. Some schemes are offering automated web-based programs to let you buy and sell foreign exchange rates. Others have sure-fire-dead-cert-cannot-possibly-fail-tips.
I think you know where I am going with this. If the tips are that good, if the automated programs are that good then why would anyone sell them etc?
All good investment news stories, blogs and articles will tell you that when speculating on the financial markets you need to understand that there are risks. Whether you use spread bets, ETFs or just trade shares, you can lose money.
So what options are there for those wanting an investment option which offers risk management tools, tax benefits* and access to thousands of global markets?
Here in the UK, and increasingly across the international community, many think that spread betting is a suitable solution.
I have talked about the fact that there are risks when you invest. All forms of speculation or investment, from trading stocks and shares to having a pension to buying a house, have a negative side. If you spread bet you can lose more than you initially staked.
It can be useful to think about some of the other areas that the follow warning notice covers; ‘spread betting carries a high level of risk. Ensure that spread betting matches your investment objectives. Make sure you familiarise yourself with the risks. Where necessary, seek independent advice’.
Spread Betting and Risk Management
That said, you are able to add a limit to the size of your position to reduce your losses but not your profits. You could also reduce your trades by using smaller £1 per point or $1 per point stakes.
To gain a little exposure you could simply trade the popular markets such as the Stock Market Indices, ie speculate on whether the FTSE 100, Dow Jones, German Dax 30 etc will rise or fall.
With any of these, as mentioned, you can trade £1 per point or $1 per point etc. If you speculate on the FTSE 100 to go up, with a £1 per point stake, and it goes up by 115 points then you would make 115 points x £1 per point = £115.
Note that you can trade the markets in Dollars, Sterling or Euros. If you want to trade in Euros then 115 points x €1 per point = €115.
Of course, should the market move against you, dropping by say 95 points, then with a £1 stake you would lose 95 points x £1 per point = £95.
Obviously this would not be a great start. However, with some firms you can add a Stop Loss at let's say, 50 points (note that not all Stop Losses are guaranteed).
If you were betting on the FTSE 100 then your bet would be closed if the FTSE 100 moved against you by 50 points. Therefore, instead of losing £95, you'd only lose 50 points x £1 per point = £50.
If however, you correctly predicted the direction of the FTSE then your upside would still be £115 if it moved 115 points or £80 if the FTSE 100 moved 80 points.
Advantages of Spread Betting
When spread betting there are plenty of other positives, not just this risk management element. Spread betting gives you access to a wide variety of global markets that you can trade including stocks and shares, indices, forex and commodities markets.
In contrast with more traditional share trading, you can take short positions on a market. Financial spread betting offers you the option of trading in either direction. This means that if your research leads you to think that the price of Gold is going to increase then you can spread bet on it to rise. If you think the price of Coffee will go down then you can spread bet on it to fall.
There is no exchange of any assets or rights; instead you merely spread bet on the future price of a market. Therefore, spread betting profits are not subject to income tax, capital gains or stamp duty*.
Because you are dealing with a spread betting company there aren’t any broker’s fees.
Example - Spread Betting on the FTSE 100
You would be forgiven for thinking, this sounds very positive but what’s the catch? Well, as mentioned previously, there are risks. Therefore, before you trade perhaps we should consider an example in more detail:
If you decide to spread bet on the FTSE 100 then, on visiting a spread betting website like FinancialSpreads.com, you may find a spread betting price of 5519 - 5520.
This means you can bet on the FTSE 100 to move higher than 5520 or to move lower than 5519.
When spread betting, you bet on every unit the market increases or decreases; in the case of the FTSE 100 market a unit is 1 point of the index's price movement.
For this instance, you could choose to bet £2 for every point the FTSE 100 increases or decreases.
If you were to buy the FTSE 100 at 5520 and the index went up then the spread might become 5567 - 5568. If that were to happen, you might decide to close your spread trade at 5567.
Your Profits (or Losses) = (settlement value of the market - opening value of the market) x stake per point
Your Profits (or Losses) = (5567 - 5520) x £2 per point stake
Your Profits (or Losses) = 47 points x £2 per point
Your Profits (or Losses) = £94 profit
However, if the market were to drop down to, as an example, 5476 - 5477, you could choose to close your spread bet to prevent further losses. If so, you would sell at 5476.
With the same £2 per point stake:
Your Profits (or Losses) = (settlement value of the market - opening value of the market) x stake per point
Your Profits (or Losses) = (5476 - 5520) x £2 per point stake
Your Profits (or Losses) = -44 points x £2 per point
Your Profits (or Losses) = -£88 loss
If you are looking to trade the markets then you can spread bet with regulated companies like Financial Spreads and CMC Markets.
And don’t forget, a key element of trading is keeping your greed under control. If you employ small stake sizes and use a Stop Loss then that can help to lower your risk.
Stock Market Indices |
 |
 |
 |
 |
 |
 |
 |
| FTSE 100 Daily |
 |
|
|
|
|
|
|
| FTSE 100 Future |
|
|
|
|
|
|
|
| Wall Street (Dow) Daily |
|
|
|
|
|
|
|
| Wall Street (Dow) Future |
|
|
|
|
|
|
|
| DAX 30 Daily |
|
|
|
|
|
|
|
| DAX 30 Future |
|
|
|
|
|
|
|
| S&P 500 Daily |
|
|
|
|
|
|
|
| S&P 500 Future |
|
|
|
|
|
|
|
| Other Indices |
|
|
|
|
|
|
|
The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
Advert
Financial Spreads
Spread Betting - No Fees, No Commissions, Free Charts and Live Prices.
Spread Bet on Indices, Forex, Commodities, Shares and more. For details see Financial Spreads.
|
"A Guide to Spread Betting on the FTSE 100" last update by R Thomas, 03-Jun-2010
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
Similar articles:
Spread Betting on Indices - last update: 17-May-2012
Spread Betting on Indices - which spread betting firms offer spread betting on indices, live indices spread betting prices and indices charts, plus how to trade index markets and . . . read more - Spread Betting on Indices.
Index Spread Betting - last update: 24-Apr-2012
Index Spread Betting - a look at which spread betting companies offer index spread betting and index charts, where to find live index spreads, how to spread bet on the indices and . . . read more - Index Spread Betting.
FTSE Spread Betting - last update: 04-May-2012
FTSE Spread Betting - a guide to the FTSE 100 spread betting market: which companies offer FTSE spread betting, live FTSE spread betting prices and FTSE charts, plus how to spread bet on the FTSE 100 and . . . read more - FTSE Spread Betting.
Spread Bets and the Dax 30 - last update: 04-May-2012
Spread Bets and the Dax 30 - the complete spread betting guide to the Dax 30 index: where to find Dax 30 spread bets, live Dax 30 spreads prices and stock market spread betting charts, plus how to spread bet on the Dax 30 as well as . . . read more - Spread Bets and the Dax 30.
Spread Bets and Wall Street - last update: 04-May-2012
Spread Bets and the Wall Street Index - the complete spread betting guide to the Wall Street index: where to find Wall Street spread bets, live Wall Street spreads prices and candlestick charts, plus how to spread bet on the Wall Street index as well as . . . read more - Spread Bets and Wall Street.
Spread Bets and the Nikkei - last update: 04-May-2012
Spread Bets and the Nikkei - the complete spread betting guide to the Nikkei index: where to find Nikkei spread bets, live Nikkei spreads prices and stock market spread betting charts, plus how to spread bet on the Nikkei as well as . . . read more - Spread Bets and the Nikkei.
Spread Bets and S&P 500 - last update: 04-May-2012
Spread Bets and the S&P 500 - the complete spread betting guide to the S&P 500 index: where to find S&P 500 spread bets, live S&P 500 spreads prices and stock market candlestick charts, plus how to spread bet on the S&P 500 as well as . . . read more - Spread Bets and S&P 500.
Spread Bets and the Dow Jones - last update: 04-May-2012
Spread Bets and the Dow Jones - the complete spread betting guide to the Dow Jones index: where to find Dow Jones spread bets, live Dow Jones spreads prices and spread betting charts, plus how to spread bet on the Dow Jones as well as . . . read more - Spread Bets and the Dow Jones.
Spread Bets and the CAC 40 - last update: 04-May-2012
Spread Bets and the CAC 40 - the complete spread betting guide to the CAC 40 index: where to find CAC 40 spread bets, live CAC 40 spreads prices and stock market charts, plus how to spread bet on the CAC 40 as well as . . . read more - Spread Bets and the CAC 40.
Spread Betting on the AEX - last update: 08-May-2012
Spread Betting on the AEX - AEX spread betting review: which spread betting companies offer spread betting on the AEX stock market index, real-time AEX spread betting prices and AEX charts, an AEX spread betting example and . . . read more - Spread Betting on the AEX.
Spread Betting on the Euro Stoxx - last update: 08-May-2012
Spread Betting on the Euro Stoxx - Euro Stoxx spread betting review: which spread betting companies offer spread betting on the Euro Stoxx index, real-time Euro Stoxx spread betting prices and Euro Stoxx charts, a Euro Stoxx spread betting example and . . . read more - Spread Betting on the Euro Stoxx.
Spread Betting on the Nasdaq - last update: 08-May-2012
Spread Betting on the Nasdaq - Nasdaq spread betting review: which spread betting companies offer spread betting on the Nasdaq stock market index, real-time Nasdaq spread betting prices and Nasdaq charts, a Nasdaq spread betting example and . . . read more - Spread Betting on the Nasdaq.
Spread Betting on the Nifty 50 - last update: 08-May-2012
Spread Betting on the Nifty 50 Index - Nifty 50 Index spread betting review: which spread betting companies offer spread betting on the Nifty 50 Index, real-time Nifty 50 Index spread betting prices and Nifty 50 Index charts, a Nifty 50 Index spread betting example and . . . read more - Spread Betting on the Nifty 50.
Spread Betting on the UK 100 - last update: 08-May-2012
UK 100 Spread Betting: a guide to spread betting on the UK 100 - which firms offer spread betting on the UK 100 index, live UK 100 stock market prices and UK 100 spread betting charts, how to spread bet on the UK 100 as well as . . . read more - Spread Betting on the UK 100.
Spread Betting on the Australia 200 - last update: 08-May-2012
Spread Betting on the Australia 200 - Australia 200 spread betting review: which spread betting companies offer spread betting on the Australia 200 stock market index, real-time Australia 200 spread betting prices and Australia 200 charts, an Australia 200 spread betting example and . . . read more - Spread Betting on the Australia 200.
Spread Betting on the Hang Seng - last update: 08-May-2012
Spread Betting on the Hang Seng - Hang Seng spread betting review: which spread betting companies offer spread betting on the Hong Kong Hang Seng stock market index, real-time Hang Seng spread betting prices and Hang Seng charts, a Hong Kong Hang Seng spread betting example and . . . read more - Spread Betting on the Hang Seng.
Spread Betting on the Ireland ISEQ 20 - last update: 08-May-2012
Spread Betting on the Ireland ISEQ 20 - Ireland ISEQ 20 spread betting review: which spread betting companies offer spread betting on the Ireland ISEQ 20 stock market index, real-time Ireland ISEQ 20 spread betting prices and Ireland ISEQ 20 charts, an Ireland ISEQ 20 spread betting example and . . . read more - Spread Betting on the Ireland ISEQ 20.
Spread Betting on the FTSE 250 - last update: 08-May-2012
FTSE 250 Spread Betting - the complete guide to spread betting on the FTSE 250 stock market index: where to find FTSE 250 spread betting, real-time FTSE 250 spread betting prices and FTSE 250 candlestick charts, plus how to spread bet on the FTSE 250 and . . . read more - Spread Betting on the FTSE 250.
Spread Betting on the Russell 2000 - last update: 08-May-2012
Spread Betting on the Russell 2000 - Russell 2000 spread betting review: which spread betting companies offer spread betting on the Russell 2000 stock market index, real-time Russell 2000 spread betting prices and Russell 2000 charts, a Russell 2000 spread betting example and . . . read more - Spread Betting on the Russell 2000.
Spread Betting on the Sweden 30 - last update: 08-May-2012
Spread Betting on the Sweden 30 - Sweden 30 spread betting review: which spread betting companies offer spread betting on the Sweden 30 stock market index, real-time Sweden 30 spread betting prices and Sweden 30 charts, a Sweden 30 spread betting example and . . . read more - Spread Betting on the Sweden 30.
Spread Betting on the Irish Stock Market - last update: 08-May-2012
Spread Betting on the Irish Stock Market - Irish Stock Market spread betting review: which spread betting firms offer spread betting on the Irish Stock Market index, real-time Irish Stock Market spread betting prices and Irish Stock Market charts, an Irish Stock Market spread betting example and . . . read more - Spread Betting on the Irish Stock Market.
Spread Betting on the FTSE 100 - last update: 03-May-2012
Spread Betting on the FTSE 100 - FTSE 100 spread betting review: which spread betting companies offer spread betting on the FTSE 100 stock market index, real-time FTSE 100 spread betting prices and FTSE 100 charts, a FTSE 100 spread betting example and . . . read more - Spread Betting on the FTSE 100.
Spread Betting on the S+P - last update: 03-May-2012
Spread Betting on the S+P: a review of S+P spread betting - which spread betting firms offer spread betting on the S+P 500 stock market index, real-time S+P spread betting prices and S+P charts, an S+P spread betting example and . . . read more - Spread Betting on the S+P.
Spread Bets and the Nasdaq 100 - last update: 03-May-2012
Spread Bets and the Nasdaq 100 - the complete spread betting guide to the Nasdaq 100 index: where to find Nasdaq 100 spread bets, live Nasdaq 100 spreads prices and stock market charts, plus how to spread bet on the Nasdaq 100 as well as . . . read more - Spread Bets and the Nasdaq 100.
Spread Betting on the Dax - last update: 03-May-2012
Spread Betting on the Dax - Dax spread betting review: which spread betting companies offer spread betting on the Dax stock market index, real-time Dax spread betting prices and Dax charts, a Dax spread betting example and . . . read more - Spread Betting on the Dax.
Spread Betting on the CAC - last update: 03-May-2012
Spread Betting on the CAC - CAC spread betting review: which spread betting companies offer spread betting on the CAC stock market index, real-time CAC spread betting prices and CAC charts, a CAC spread betting example and . . . read more - Spread Betting on the CAC.
Spread Bets and the ASX 200 - last update: 03-May-2012
Spread Bets and the ASX 200 - the complete spread betting guide to the ASX 200 index: where to find ASX 200 spread bets, live ASX 200 spreads prices and stock market spread betting charts, plus how to spread bet on the ASX 200 as well as . . . read more - Spread Bets and the ASX 200.
Spread Bets and the Ireland 20 - last update: 03-May-2012
Spread Bets and the Ireland 20 - the complete spread betting guide to the Ireland 20 index: where to find Ireland Top 20 spread bets, live Ireland 20 spreads prices and Top 20 charts, plus how to spread bet on the Ireland 20 as well as . . . read more - Spread Bets and the Ireland 20.
Spread Betting on the Nikkei 225 - last update: 03-May-2012
Spread Betting on the Nikkei 225 - Nikkei 225 spread betting review: which spread betting companies offer spread betting on the Nikkei 225 stock market index, real-time Nikkei 225 spread betting prices and Nikkei 225 charts, a Nikkei 225 spread betting example and . . . read more - Spread Betting on the Nikkei 225.
Spread Bets and the India 50 - last update: 03-May-2012
Spread Bets and the India 50 - the complete spread betting guide to the India 50 index: where to find India 50 spread bets, live India 50 spreads prices and stock market spread betting charts, plus how to spread bet on the India 50 as well as . . . read more - Spread Bets and the India 50.
FTSE Spread Betting Facts - last update: 30-Apr-2012
All financial markets can be affected by rumour, just ask HBOS who saw their share price drop 18% on unfounded hear say. If you are looking to trade the FTSE 100 what are the facts? . . . read more - FTSE Spread Betting Facts.
FTSE Spread Betting Tools - last update: 30-Apr-2012
The FTSE 100 is experiencing large price changes with 50+ point swings on a daily basis and a 400 point drop in June. The key question is: How to make money by spread betting on the FTSE 100? A good place to start is to make sure you are trading with as few costs and as much real . . . read more - FTSE Spread Betting Tools.
FTSE 100 Spread Betting Protection - last update: 30-Apr-2012
There are a large number of opportunities to profit from trading Indices like the FTSE 100 but what about a little protection. With each potential profit there is a potential loss. Here are four important spread betting tips to . . . read more - FTSE 100 Spread Betting Protection.
FTSE 100 Spread Betting Guide - last update: 01-Aug-2011
Spread betting is gaining popularity as a way of trading the FTSE 100. This FTSE 100 spread betting guide considers the advantages of FTSE 100 spread betting, the spread betting firms and . . . read more - FTSE 100 Spread Betting Guide.
Factors that Influence the FTSE 100 - last update: 01-Jul-2011
It is simply not possible to list all the factors influencing the FTSE 100. Having said that, there are certain things that, quite predictably, have a direct effect on the FTSE 100 and that a trader, or someone spread betting, should look out for . . . read more - Factors that Influence the FTSE 100.
Where Now for the FTSE 100 Spread Betting Market? - last update: 17-Mar-2011
Social and political unrest, civil war, natural disasters, man-made disasters, sovereign debt downgrades. All together they don't mix very well with the shares spread betting markets which have . . . read more - Where Now for the FTSE 100 Spread Betting Market?.
UK Spread Betting Markets Rise After US Indices Bounce - last update: 02-Dec-2010
Headlines in the newspapers that British Banks 'borrowed' a trillion Dollars from the Fed in 2007/2009 are a classic example of selective journalism. It is only deep into the various articles that you realise . . . read more - UK Spread Betting Markets Rise After US Indices Bounce.
Spread Betting in Volatile Markets - last update: 08-Nov-2010
As expected the decision to inject $600bn into the economy caused hysteria within the market. The Dow Jones saw a number of volatile 100 point moves before finally settling higher. The volatility was . . . read more - Spread Betting in Volatile Markets.
Will the FTSE 100 Spread Betting Market Carry On Rising? - last update: 29-Oct-2010
The market rally since July 2010 has seen stocks gain nearly 20%, but along the way we have seen our fair share of wobbles. The root cause for each wobble has been a . . . read more - Will the FTSE 100 Spread Betting Market Carry On Rising? .
Spread Betting Markets Gain Strength in Spite of Increased Regulation - last update: 27-Sep-2010
Markets across the globe are on the up, which is somewhat surprising considering that the talks surrounding Basle III have managed to potentially deliver a . . . read more - Spread Betting Markets Gain Strength in Spite of Increased Regulation.
A Bear Market Rally or a Time to Buy Spread Betting Indices? - last update: 04-Aug-2010
The stock market is looking a little stronger and investors are dipping back into equities following a three month decline. At the moment there is a concern for the bulls. Looking at the spread betting charts . . . read more - A Bear Market Rally or a Time to Buy Spread Betting Indices?.
Spread Betting Markets Looking Resilient - last update: 04-Aug-2010
Both market commentators and traders are concentrating on the recent data out of China and the US. The prognosis is less than positive. Despite the falls, stock yields are looking increasingly attractive as . . . read more - Spread Betting Markets Looking Resilient.
Spread Betting Index Markets Boosted by Chinese Monetary Policy - last update: 02-Jul-2010
The Chinese have recently announced that they would ease their currency peg to the US Dollar. The immediate reaction in the world markets was . . . read more - Spread Betting Index Markets Boosted by Chinese Monetary Policy.
A Guide to Spread Betting on the FTSE 100 - last update: 03-Jun-2010
When you look around the internet there are numerous get rich quick sites. A good number of these focus on the financial markets, be it the currency markets or penny stocks and shares. Some schemes are offering . . . read more - A Guide to Spread Betting on the FTSE 100.
Spread Betting on Stock Markets and Risk Management - last update: 28-May-2010
Up until 2007 global stock markets experienced some of the longest bull runs in history. However, over the last few years, the stock markets have been incredibly volatile. We are now half way through 2010 and . . . read more - Spread Betting on Stock Markets and Risk Management.
Sterling and Europe - last update: 05-Feb-2009
For longer term equity holders we are also running into the 'aging population' effect. A greater and greater percentage of the populace is tipping over retirement age which generally means equity redemptions rather than equity purchases. The up and coming generations may have . . . read more - Sterling and Europe .
Spread Betting on the FTSE in 2009 - last update: 29-Jan-2009
We are still in a bear market whether anyone likes it or not and the bounce from the November 2008 lows lasted 30 days in total. That happens to be the average length of time that bear market rallies last. Technically the bears are still in control and from a fundamental standpoint the . . . read more - Spread Betting on the FTSE in 2009.
FTSE 100 Spread Betting Surprise - last update: 29-Jan-2009
With optimism so low, are there any benefits for traders out there looking to buy and/or sell the markets? By mid-January 2009, the market volatility of 2008 had returned and for anyone spread betting by trading ranges there was, and still is, money to be made. Of course you . . . read more - FTSE 100 Spread Betting Surprise.
Selling the FTSE 100 - last update: 19-Sep-2008
Selling the FTSE 100 >> Looking on a long-term basis the FTSE 100 has not moved much. It is not far away from the level it was at back in 1997. Do not forget the FTSE is not a like for like comparison. It continually . . . read more - Selling the FTSE 100.
|
|
|
Free Financial Email: Latest Spread Betting Offers and where to find narrow spreads.
Click here to sign up.
|
|
