UK Spread Betting

UK Spread Betting

The Advantages of UK Spread Betting

There are a wide variety of financial spread betting companies that focus on providing a service for UK investors.

These spread betting companies tend to offer markets on all of the major UK shares and indices such as the FTSE 100 index. A number also offer spread bets on FTSE 250 and AIM listed companies.

UK spread bettors can nearly always spread bet in Sterling regardless of the market on which they are trading. For example, crude oil is priced in US Dollars per Barrel and Gold is priced in US Dollars per Ounce. However, you can trade both of these, in Sterling, via your UK spread betting account.

As the above suggests, many of the UK facing spread betting firms offer easy access to a wide range of international markets which some UK investors may normally find difficult to gain exposure to.

In fact, some UK spread betting companies, such as Financial Spreads, offer a 24 dealing desk so that UK based investors can trade on international markets even when the underlying exchange may be closed. For more details, please see 24 Hour Spread Betting.



UK Spread Betting Companies



UK Shares Spread Betting

Shares

Financial Spreads ETX Capital Spreadex IG City Index
FTSE 100 Shares Financial Spreads FTSE 100 Shares ETX Capital FTSE 100 Shares Spreadex FTSE 100 Shares IG 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 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 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 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 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 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 CAC 40 Shares City Index CAC 40 Shares
Irish Shares Financial Spreads Irish Shares ETX Capital Irish Shares Spreadex Irish Shares IG Irish Shares City Index Irish Shares
Other Shares Financial Spreads Other Shares ETX Capital Other Shares Spreadex Other Shares IG Other Shares City Index Other Shares
The above spread betting markets may also be available with other companies. Also see financial spread betting comparison notes.

For more details on trading equities see Shares Spreads.


UK and International Stock Index Spread Betting

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

For more details on trading stock market indices also see Index Spreads.


How to Spread Bet on UK Indices

FTSE 100 Index (December) Spread Trading Example

The current price of the FTSE 100 Index (December) market is 5216 – 5220 with Tradefair.

As with many leading indices, investors can place a spread bet on the future price of the FTSE 100 to go up or down in value. With the FTSE 100 Index (December) market, which closes on 18-Dec-09, you can speculate on:

a) the FTSE 100 to settle above 5220 on the closing date, or
b) the FTSE 100 to settle below 5216 on the closing date.

Note that with the FTSE 100 market you trade in £X per point, where a point is 1 point of FTSE 100 movement. As a result, if your stake was £4 per point and the FTSE 100 price moves by 8 points then you would see a change to your profits/losses of £32.

FTSE 100 Spread Betting Example

For example, let’s assume you see the real time price on a spread betting website and it gives a spread of 5216 – 5220. So, after your market analysis, you might feel that the FTSE 100 Index will rise and close above 5220. This implies:
  1. You think that the FTSE 100 should increase
  2. Therefore, you decide you are going to go long of the market at 5220 and risk £2 per point
  3. The market rises and so you let your trade run to the closing date of 18-Dec-09
  4. The market closes at a value of 5262
  5. Your initial buy price: 5220
  6. P&L = (Settlement Price – Opening Price) x stake
  7. P&L = (5262 – 5220) x £2 per point
  8. P&L = 42 x £2 per point
  9. P&L = £84 profit
However, if the market failed to move as forecast, and had the FTSE 100 decreased in value, closing lower at 5179, then you would have lost on this trade.
  1. Price you bought the spread bet at: 5220
  2. P&L = (Settlement Price – Opening Price) x stake
  3. P&L = (5179 – 5220) x £2 per point
  4. P&L = -41 x £2 per point
  5. P&L = -£82 loss
(Financial spread trading prices correct as of 10-Nov-09)


How to Spread Bet on UK Shares

British Airways (December) Spread Betting Example

Looking at the equities markets, the current price of the British Airways (December) market is 196.6p – 197.2p with InterTrader.

Like many shares listed on the leading exchanges, investors can speculate on the future price of British Airways shares to go up or down in value. With the British Airways (December) market, which closes on 15-Dec-09, an investor can place a spread bet on:

a) British Airways shares to close higher than 197.2p on the settlement date, or
b) British Airways shares to close lower than 196.6p on the settlement date.

Note that with the British Airways market you trade in £X per penny, where a penny is 1p of British Airways share price movement. As a quick example, if you invested £14 per penny and the British Airways share price moves 8p then that would be a difference to your P&L of £112.

British Airways Equities Trading Example

For example, let’s assume you see the real time price on an online spread trading website that gives the spread of 196.6p – 197.2p. After your analysis, you might come to think that the British Airways share price should rise and close above 197.2p. This would mean:
  1. You think that the British Airways shares will increase
  2. Therefore, you want to go long of, or buy, the market at 197.2p and you risk £7 per penny
  3. The share price rises. You let your bet run to the settlement date of 15-Dec-09
  4. The share price settles at 208.0p
  5. You bought the market at 197.2p
  6. Profits (or losses) = (Final Level – Initial Level) x stake
  7. Profits (or losses) = (208.0p – 197.2p) x £7 stake
  8. Profits (or losses) = 10.8p x £7 stake
  9. Profits (or losses) = £75.60 profit
Spread trading does not always go to plan. If the market failed to move as forecasted, and had the British Airways shares decreased in value, settling lower at 187.0p, then you would have lost.
  1. Initial buy price = 197.2p
  2. Profits (or losses) = (Final Level – Initial Level) x stake
  3. Profits (or losses) = (187.0p – 197.2p) x £7 stake
  4. Profits (or losses) = -10.2p x £7 stake
  5. Profits (or losses) = -£71.40 loss
(Spread betting prices quoted: 10-Nov-09)


About Financial Spread Betting

Financial spread betting on the financial markets can be exciting, especially when you consider the profits that you might make. And there is little downside to making a profit. Nevertheless, there is a distinct downside to speculating on the financial markets. Whether you speculate on shares, or even if you invest with a newer products like ETFs or CFDs, there will always be risks.

You are probably on this website because many investors are turning to financial spread betting. Spread betting offers a quick and convenient investment option for those who want to access to a wide range of local and international markets.

Before we discuss the advantages though, you should note that 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.




Spread Betting Risks and Risk Management

There are many benefits to financial spread betting, however there is also a primary drawback. Given that spread betting is a margined (leveraged) investment product, it does come with a high degree of risk to your funds and you can incur losses that exceed your deposit.

As with all investing, the fact that you can lose should always be at the forefront of your planning. With that in mind, you will find there are a couple of simple methods of minimising your risk.

A lot of investors use a combination of a) Guaranteed Stop Loss orders and b) trading with smaller stakes as a way of limiting their downside.

Guaranteed Stop Losses enable you to put limits on exactly how much you are risking on each trade.

If you trade with smaller stakes, then naturally you are reducing your potential profit levels, but you are also reducing the amount that you can lose.

With most firms, you can open a spread betting account with £200-250 and trade with modest stakes. With a spread betting account from Financial Spreads or ETX, it is possible to spread bet on the FTSE 100, FTSE 250, FTSE 350 shares, GBP/USD, EUR/GBP, gold etc. from as little as £1 per point.


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