How it works
Spread Betting and CFD trading carry a high level of risk to your capital; you should ensure you understand the risks involved. Please read the full risk warning.
The 'spread', also known as the 'dealing spread', is simply the difference between the price at which you can 'buy' and the price at which you can 'sell' a particular market. When opening or closing a bet, you buy at the upper end of the spread and sell at the lower end.
For example, say the FTSE 100 Daily quote was 4525 / 4527. The spread is two points: if you want to 'buy' you do so at 4527 and if you want to 'sell' you do so at 4525.
Pounds per point
There is one crucial way in which Spread Betting differs from conventional share trading. Instead of buying a quantity of shares you simply decide how much money you would like to bet per point.
For shares, each point is equivalent to a 1 penny movement in the share-price (or 1 cent for US shares, and 1 euro-cent for European shares).
For indices, each point is equivalent to a 1 point movement in the quoted price for the index. For example, if the FTSE-100 index moved from 4500 to 4501, it would have moved by one point.
With Spread Betting, you have the option of placing a bet either in the hope the price will increase - which is called 'going long', or will fall - called 'going short'. Going long and short explained.
Index