A Review of Spread Betting on Shares

Spread Betting

Shares Spread Betting


The SpreadBets guide to spread betting on shares:



About Spread Betting on Shares




Share trading is, in many ways, one of the most fundamental aspects of all financial trading and investing.

The ability to buy and sell shares is long established. More recently, it has become possible to spread bet on the future value of shares ie speculating on what the price of a share will be in one minute, a few hours, days or even months.

Spread betting offers a few key advantages over share trading:
  • Profits are free of capital gains tax*

  • Transactions are free of stamp duty*

  • An investor can go long or short. That is to say you can bet on the market to go up or down. Spread betting is one of the easiest ways to ‘Short’ a share

  • Trading on margin allows you to leverage your funds. This means you do not need to lock up large amounts of capital. This naturally increases your upside. Note though that this is increasing your risk and, therefore, your potential downside. You can lose more than your initial investment

  • There are, generally, no brokers fees or commissions

  • This form of trading allows easy access to a range of International Shares eg you can spread bet on shares listed in the UK, USA, Germany, Ireland, Denmark, Australia, India, etc

If you are looking to trade whole stock market indices, like the FTSE 100 or Dow Jones, please see our index spread betting guide.



Where Can I Spread Bet on Shares?




You can place trades on a wide range of shares via the following trading platforms:

Shares

Financial Spreads ETX Capital Spreadex IG Index City Index
FTSE 100 Shares Financial Spreads FTSE 100 Shares ETX Capital FTSE 100 Shares Spreadex FTSE 100 Shares IG Index FTSE 100 Shares City Index FTSE 100 Shares
FTSE 250 Shares Financial Spreads FTSE 250 Shares ETX Capital FTSE 250 Shares Spreadex FTSE 250 Shares IG Index FTSE 250 Shares City Index FTSE 250 Shares
Wall Street Shares Financial Spreads Wall Street Shares ETX Capital Wall Street Shares Spreadex Wall Street Shares IG Index Wall Street Shares City Index Wall Street Shares
S&P 500 Shares Financial Spreads S&P 500 Shares ETX Capital S&P 500 Shares Spreadex S&P 500 Shares IG Index S&P 500 Shares City Index S&P 500 Shares
Nasdaq 100 Shares Financial Spreads Nasdaq 100 Shares ETX Capital Nasdaq 100 Shares Spreadex Nasdaq 100 Shares IG Index Nasdaq 100 Shares City Index Nasdaq 100 Shares
DAX 30 Shares Financial Spreads DAX 30 Shares ETX Capital DAX 30 Shares Spreadex DAX 30 Shares IG Index DAX 30 Shares City Index DAX 30 Shares
CAC 40 Shares Financial Spreads CAC 40 Shares ETX Capital CAC 40 Shares Spreadex CAC 40 Shares IG Index CAC 40 Shares City Index CAC 40 Shares
Irish Shares Financial Spreads Irish Shares ETX Capital Irish Shares Spreadex Irish Shares IG Index Irish Shares City Index Irish Shares
Other Shares Financial Spreads Other Shares ETX Capital Other Shares Spreadex Other Shares IG Index Other Shares City Index Other Shares
The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.



Live Share Chart



The following live chart is useful for US stocks, for shares listed in other countries, see shares spread betting charts.






Where Can I Get Live Shares Spread Betting Prices and Charts?




The providers mentioned above give users live prices and charts which have wide range of technical analysis features.

Typical spread betting chart from FinancialSpreads:

Example candlestick chart



Shares Spread Betting Guides by Country / Index




On SpreadBets we have a wide range of individual shares guides. For more worked examples and more details see:

European share guides: American share guides:
UK Shares Spread Betting Example

UK Shares Spread Betting Example



If you are thinking about financial spread betting on UK shares like Barclays then, on visiting a trading platform like CapitalSpreads.com, at the time of writing you'd get a quote of 218.79p - 219.06p.

That means you can speculate on Barclays to go above 219.06p or go below 218.79p.

When spread trading, you speculate on every unit the market rises or falls. In the case of the Barclays market a unit is 1p of the share's price movement.

Let's say, for instance, that you want to trade £10 for every penny Barclays increases or decreases.


Spread Betting on UK Shares to Rise



If you were to go long of Barclays at 219.06p and the shares rose then the spread could move to 227.82p - 228.09p. Therefore, you could close your trade at 227.82p.

Your Profits (or Losses) = (final price of the market - opening price of the market) x stake per penny
Your Profits (or Losses) = (227.82p - 219.06p) x £10 per penny stake
Your Profits (or Losses) = 8.76p x £10 per penny
Your Profits (or Losses) = £87.60 profit

The markets can of course fall, if the shares had fallen to 209.20p - 209.47p, you may decide to close your position to limit your losses. Assuming this was the case, you would sell the market at 209.20p.

You would do this with the same £10 per penny stake:

Your Profits (or Losses) = (final price of the market - opening price of the market) x stake per penny
Your Profits (or Losses) = (209.20p - 219.06p) x £10 per penny stake
Your Profits (or Losses) = -9.86p x £10 per penny
Your Profits (or Losses) = -£98.60 loss


Spread Betting on UK Shares to Fall



One major benefit of financial spread betting is that investors can short sell the markets, i.e. bet that the markets will go down.

When we started this example, the market was priced at 218.79p - 219.06p.

If you were to sell Barclays at 218.79p and the shares decreased then the price could move to 208.37p - 208.64p. If that happened, you might decide to close your bet for a profit by buying at 208.64p.

Your Profits (or Losses) = (opening price of the market - final price of the market) x stake per penny
Your Profits (or Losses) = (218.79p - 208.64p) x £10 per penny stake
Your Profits (or Losses) = 10.15p x £10 per penny
Your Profits (or Losses) = £101.50 profit

The markets can of course rise, if the shares were to rise to, as an example, 229.94p - 230.21p, you might want to close your bet to prevent further losses. In that case, you'd buy the market at 230.21p.

Therefore, with the same £10 per penny stake:

Your Profits (or Losses) = (opening price of the market - final price of the market) x stake per penny
Your Profits (or Losses) = (218.79p - 230.21p) x £10 per penny stake
Your Profits (or Losses) = -11.42p x £10 per penny
Your Profits (or Losses) = -£114.20 loss


Barclays Rolling Daily spread betting prices quoted as of 12-Aug-14.

This is a rolling daily trade. This sort of market doesn't have a fixed settlement date and will just rollover to the next trading day. If it does roll, then you may incur a small charge or receive a small credit. For more, see rolling daily spread betting.


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.



American Shares Spread Betting Example

US Shares Spread Betting Example



If you wanted to spread bet on a US equity like Apple then, on visiting a site like CapitalSpreads.com, at the moment you'd see a quote of $95.90 - $96.01.

As a result, you could bet on Apple to go higher than $96.01 or to go lower than $95.90.

With spread betting, you trade on every unit the market moves up or down. With the Apple market a unit is $0.01 of the US stock's price movement.

Let's say, for this example, you choose to stake £3 for every cent Apple rises or falls.


Spread Betting on US Stocks to Rise



If you bought Apple at $96.01 and the US stocks increased then the spread could change to $96.45 - $96.56. In that case, you could close your position by selling at $96.45.

Your P&L = (settlement level of the market - opening level of the market) x stake per cent
Your P&L = ($96.45 - $96.01) x £3 per cent stake
Your P&L = $0.44 x £3 per cent
Your P&L = £132 profit

Markets do of course fall, if the US stocks had decreased to, for example, $95.54 - $95.65, you may want to close your position to prevent further losses. Assuming this was the case, you'd sell back at $95.54.

Therefore, with the same £3 per cent stake:

Your P&L = (settlement level of the market - opening level of the market) x stake per cent
Your P&L = ($95.54 - $96.01) x £3 per cent stake
Your P&L = -$0.47 x £3 per cent
Your P&L = -£141 loss


Spread Betting on US Stocks to Fall



One major benefit of spread trading is that you can short sell the markets, i.e. speculate that the markets will drop.

When we began this example, the market was priced at $95.90 - $96.01.

If you were to go short of Apple at $95.90 and the US stocks decreased then the quote could become $95.29 - $95.40. Therefore, you could close your bet for a profit by buying at $95.40.

Your P&L = (opening level of the market - settlement level of the market) x stake per cent
Your P&L = ($95.90 - $95.40) x £3 per cent stake
Your P&L = $0.50 x £3 per cent
Your P&L = £150 profit

Markets do of course rise, if the US stocks were to rise up to $96.33 - $96.44, you may want to close your bet to restrict your losses. If that were to happen, you would buy at $96.44.

You would do this with the same £3 per cent stake:

Your P&L = (opening level of the market - settlement level of the market) x stake per cent
Your P&L = ($95.90 - $96.44) x £3 per cent stake
Your P&L = -$0.54 x £3 per cent
Your P&L = -£162 loss


Apple Rolling Daily spread betting prices accurate as of 11-Aug-14.

Please note that this is a 'Rolling Daily' trade. Such markets don't have a fixed expiry date and automatically rolls over to the next trading day. If it does roll, then you may incur a small cost or receive a small credit. For more details see rolling daily markets.


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.



Shares Spread Betting 'Test' or 'Demo' Accounts



The companies listed below provide test accounts, i.e. accounts that you can use to see how spread betting works on shares without risking any funds.

InterTrader   > InterTrader



User Questions and Answers on Shares Spread Betting



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





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