Spread Bet on GBP EUR
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At the moment the GBP / EUR (December) market is 1.4208 - 1.4216 with FinancialSpreads.com.
As with many markets, spread bettors can trade on the future value of FX. In other words, traders can spread bet on the FX markets increasing or decreasing. An example is trading on the GBP / EUR rate rising to more than 1.4216 by 14-Dec-07.
Note that for the Sterling / Euro market, you trade in £X per point, where a point is 0.0001 of Sterling / Euro movement. If your stake was £10 per point and the Sterling / Euro exchange rate moves 0.0004 then that would be a £40 difference to your P&L.
1) Let's say you check the live price on a spread betting website and it shows a spread of 1.4208-1.4216 and you've done your analysis and think that the GBP / EUR rate price looks like it will increase above 1.4216
2) So you go long (buy) of the GBP / EUR (December) market. You risk £5 per point
3) The market rises. You run the spread bet until the expiry date, 14-Dec-07
4) The market settles at 1.4240
5) Price you bought the spread at 1.4216
6) P&L = ((closing price - opening level) / per point of movement) x stake
7) P&L = ((1.4240 - 1.4216) / 0.0001) x £5 per point stake
8) P&L = (0.0024 / 0.0001) x £5 per point stake
9) P&L = £120
Investing doesn't always go to plan. Had the GBP / EUR price gone down and the price finished lower at 1.4196, then you would have lost on this market.
5) Price you bought the spread at 1.4216
6) P&L = ((closing level - opening level) / per point) x stake
7) P&L = ((1.4196 - 1.4216) / 0.0001) x £5 per point stake
8) P&L = (-0.002 / 0.0001) x £5 per point stake
9) P&L = -£100
Where to spread bet on Forex:
You can currently spread bet on Gold and other commodities at:
FinancialSpreads.com
Capital Spreads
"Spread Bet on GBP EUR" written by RThomas, last updated 26-Sep-2007
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