A Review of Spread Betting on Stock Market Indices

Spread Betting

Stock Market Spread Betting


The SpreadBets guide to stock market index spread betting:



About Indices Spread Betting



The most popular spread betting markets are the 'Stock Market Indices'.

These indices represent the combined value of some of the largest companies in the world.

The FTSE 100 Index (aka UK 100) is the basis for the most popular spread betting market in the UK.

The FTSE 100 includes the likes of energies companies BP and Shell as well as banks like HSBC and Barclays.

By spread betting on the FTSE 100 to go up or down you are speculating on the aggregate movement of all of the stocks listed in the index.

A broad understanding of the markets is required owing to the variety of industries that are often represented.

Having said that, indices can make interesting trading given the nature of the markets, for example, large mining companies and financial institutions can heavily influenced the direction the FTSE 100.

So-called ‘defensive’ pharmaceuticals shares such as GlaxoSmithKline and Reckitt Benckiser are often less volatile and therefore tend not to move the FTSE 100 as much.

Other Popular Indices

3 other index markets are also very popular with spread bettors, namely:
  • Dow Jones aka Wall Street aka US30
  • S&500 aka US500 aka SPX500
  • DAX 30 aka Germany 30



Live Stock Market Index Charts






If you'd like a particular chart, use the following in the market field in the above chart.
  • Dow Jones - type 'US30'
  • DAX 30 - type 'GER30'
  • CAC 40 - type 'FRA40'
  • Australia 200 (ASX) - type 'AUS200'
  • Nikkei - type 'JPN225'
  • S&500 - type 'SPX500'
  • Etc.


Where Can I Spread Bet on Stock Indices?



Stock Market Indices

Financial Spreads ETX Capital Spreadex IG Index City Index
FTSE 100 Daily Financial Spreads FTSE Daily ETX Capital FTSE Daily Spreadex FTSE Daily IG Index FTSE Daily City Index FTSE Daily
FTSE 100 Future Financial Spreads FTSE Future ETX Capital FTSE Future Spreadex FTSE Future IG Index FTSE Future City Index FTSE Future
Wall Street (Dow) Daily Financial Spreads Wall Street (Dow) Daily ETX Capital Wall Street (Dow) Daily Spreadex Wall Street (Dow) Daily IG Index Wall Street (Dow) Daily City Index Wall Street (Dow) Daily
Wall Street (Dow) Future Financial Spreads Wall Street Future ETX Capital Wall Street Future Spreadex Wall Street Future IG Index Wall Street Future City Index Wall Street Future
DAX 30 Daily Financial Spreads DAX 30 Daily ETX Capital DAX 30 Daily Spreadex DAX 30 Daily IG Index DAX 30 Daily City Index DAX 30 Daily
DAX 30 Future Financial Spreads DAX 30 Future ETX Capital DAX 30 Future Spreadex DAX 30 Future IG Index DAX 30 Future City Index DAX 30 Future
S&P 500 Daily Financial Spreads S&P 500 Daily ETX Capital S&P 500 Daily Spreadex S&P 500 Daily IG Index S&P 500 Daily City Index S&P 500 Daily
S&P 500 Future Financial Spreads S&P 500 Future ETX Capital S&P 500 Future Spreadex S&P 500 Future IG Index S&P 500 Future City Index S&P 500 Future
Other Indices Financial Spreads More Indices? ETX Capital More Indices? Spreadex More Indices? IG Index More Indices? City Index More Indices?
The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.



Popular Index Markets



Some of the most popular indices markets include:
  • FTSE 100 – a share index that highlights the performance of the top 100 UK listed companies, as ranked by their market capitalisation. This index is also known in spread betting as the UK 100

  • German DAX 30 – a share index of Germany's top 30 companies in terms of order book volume and market capitalisation

  • Dow Jones – a share index that reflects the performance of the top 30 American stocks. Also known in spread betting as ‘Wall Street’

  • US S&P 500 – a share index that defines the broader US equity market by tracking the performance of the top 500 American stocks

  • French CAC 40 - a share index of the 40 largest companies listed on Euronext Paris, the largest French stock exchange

  • Japanese Nikkei 225 - Refers to the price-weighted average of the top 225 stocks in the Tokyo Stock Exchange

Other slightly less popular index markets include: Spread betting on stock market indices allows an investor to go long, or short. So if, after your research, you believe that the combined value of the companies will decrease then you can spread bet on the Index to go down. Naturally, you can also spread bet on it to go up.

However, spread betting on indices is a leveraged form of trading and so whilst this increases your potential upside you can also lose more than your initial stake. This means that you should be fully aware of the potential benefits and pitfalls before placing any trades.



Where Can I Get Live Spread Betting Prices and Charts on Stock Market Indices



The live chart above does give a helpful look at how the markets are behaving.

Of course, if you want a chart for some serious financial spread betting, the providers mentioned above have real-time prices as well as professional level charting packages.

Typical financial spread betting chart:

Example candlestick chart



Stock Market Spread Betting

Worked Stock Market Spread Betting Example



If you want to spread bet on an index like the UK 100 (aka FTSE 100) then you might go to a website like FinancialSpreads.com.

At the moment FinancialSpreads are offering a price of 6556.3 - 6560.3.

Therefore, you could speculate on the UK 100 to move higher than 6560.3 or to move lower than 6556.3.

With spread betting, investors trade on every unit the market increases or decreases; with the UK 100 market a unit is 1 point of the stock index's price movement.

Let's say you decide to stake £4 for every point the UK 100 rises or falls.


Buying - Speculating on the Stock Market Index to Rise



If you went long of the UK 100 at 6560.3 and the stock index rose then the market might be re-priced at 6601.6 - 6605.6. Therefore, you could close your trade by selling at 6601.6.

P&L = (closing value of the market - initial value of the market) x stake per point
P&L = (6601.6 - 6560.3) x £4 per point stake
P&L = 41.3 points x £4 per point
P&L = £165.20 profit

Nevertheless, if the stock index had fallen to 6522.9 - 6526.9, you may want to close your trade to limit your losses. If so, you would sell at 6522.9.

With the same £4 per point stake:

P&L = (closing value of the market - initial value of the market) x stake per point
P&L = (6522.9 - 6560.3) x £4 per point stake
P&L = -37.4 points x £4 per point
P&L = -£149.60 loss


Selling - Speculating on the Stock Market Index to Fall



A key benefit of spread betting is that investors can short sell the markets, i.e. bet that the markets will drop.

Initially, the market was priced at 6556.3 - 6560.3.

If you went short of the UK 100 at 6556.3 and the stock index fell then the quote could become 6517.2 - 6521.2. In that case, you could close your trade for a profit by buying at 6521.2.

P&L = (initial value of the market - closing value of the market) x stake per point
P&L = (6556.3 - 6521.2) x £4 per point stake
P&L = 35.1 points x £4 per point
P&L = £140.40 profit

The markets do of course rise, if the stock index had increased to 6584.1 - 6588.1, you may decide to close your trade to restrict your losses. Assuming this was the case, you'd buy at 6588.1.

Therefore, with the same £4 per point stake:

P&L = (initial value of the market - closing value of the market) x stake per point
P&L = (6556.3 - 6588.1) x £4 per point stake
P&L = -31.8 points x £4 per point
P&L = -£127.20 loss
  • UK 100 (December) spread betting market taken as of 12-Aug-14.
  • One thing to note is that this is a futures trade and so it has a particular settlement date when it is set to close. For this UK 100 (December) futures market the settlement date is 19-Dec-14.
  • For an example of a ‘daily’ market, rather than a futures market, please see How to spread bet on the FTSE 100 Rolling Daily


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.



Stock Market Index Practice Accounts



The following companies offer free practice accounts, i.e. accounts that you can use to have a go at spread betting on the various stock index markets without risking your money.

Financial Spreads   > Financial Spreads

InterTrader   > InterTrader



Advantages of Stock Market Index Spread Betting



  • Profits from spread betting are tax free*.

  • There are no broker's fees or commission charges.

  • Whilst you can trade over the phone you can also place spread bets online. There is an additional convenience in that a wide range of indices and other markets can be traded outside normal market hours.

  • There is a wide range of trading markets on offer which not only includes indices but also forex, shares and commodities.

  • An important feature in fast moving, volatile markets, such as the stock market indices, is that you can trade quickly. You are not actually buying or selling any rights or assets. You are purely speculating on the future value of a market.

  • Spread bets can be closed early. This can work in two ways. You can close a profitable position in order to guarantee a profit. Conversely you can also close a losing position in order to stop any further losses.

If you are looking to trade individual equities, see share spread betting guide.




User Questions and Answers on Stock Indices



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'Stock Market Spread Betting' last update by James White, 20-Feb-2017





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