Spread betting examples

Please note that, when spread betting shares, an additional spread is built into the spread bet price displayed on the platform and is applicable upon execution of any order.

Here’s a spread betting stock example. Say you want to spread bet Apple on a day that it is trading at 140. Your broker might offer you a sell price of 138 and a buy price of 142, making a spread of four points:

Imagine that Apple’s shares rise in value to a new sell price of 162 and a buy price of 166, and you decide to close your position. Because you bought at 142 and sold at 162, you’ve made a profit of 20 points multiplied by your £3 stake.

Profit: 20 x £3 = £60

In this hypothetical outcome, you got it wrong. Apple’s shares fall to a sell of 120 and a buy of 124. Because you bought at 142 and sold at 120, you’ve made a loss of 22 points multiplied by your £3 stake size.

Loss: 22 x £3 = £66

In this example, you might think that Apple’s stock price is going to go down, and therefore decide to short the stock. The principle is the same — if you’re right, you win, if you’re wrong, you lose — but this time, because you’ve bet the price will drop, you profit if the share price goes down.

Let’s say that the share price is now 160 and your broker offers you a buy price of 162 and a sell price of 158, meaning the spread is four.

Imagine you are right — Apple’s shares decline to a new sell price of 136 and a buy price of 140 and you decide to close your position. Because you sold at 158 and bought at 140, you’ve made a profit of 18 points multiplied by your £2 stake.

Profit: 18 x £2 = £36

Imagine you were wrong and Apple’s shares rise to a sell of 190 and a buy of 194. You manage to close out before the price rises any higher, but because you sold at 158 and bought at 194, you’ve made a loss of 36 points multiplied by your £2 stake.

Loss: 36 x £2 = £72

You can also choose to spread bet on a stock market index following the same principles. In this spread betting example, let’s say that you think the FTSE 100 index is performing well and will likely rise in price. In this case, you could open a long position on our UK 100 instrument, which is a derivative based on the index.

Imagine you are right and the price moves up to a new sell price of 5,830 and buy price of 5,831. You close your position and because you bought at 5,790 and sold at 5,830, your profit is the difference (40 points) multiplied by your £5 stake.

Profit: £5 x 40 = £200

Unfortunately, you got it wrong and the UK 100 drops to a new sell price of 5,760. You’re concerned the index will keep falling so decide to cut your losses and sell to close your position. As you bought at 5,790 and sold at 5,760, you’ve lost the difference of 30 points multiplied by your £5 stake.

Loss: £5 x 30 = £150

You can also speculate on forex pairs. In this spread betting example, you are effectively betting on a pair of currencies — for example the UK pound and the US dollar (GBP/USD) — and how much one will rise or fall against the other. When spread betting forex​, the price is always quoted as the value of the first currency (known as the base currency) against the second currency (the quote currency) and shorting means betting the base currency will go down.

In this currency pair, if you want to bet that sterling will fall against the dollar, you are shorting the pound. Say, for example, the opening price is 1.5000. Your broker applies a two-point spread, meaning you can sell at 1.4999 or buy at 1.5001. You want to short the pound, so you sell at £5 per point. As our margin rate is only 3.33%, you need to deposit only 3.33% of the value of the whole trade.

You are correct, the pound falls to 1.4950, and your broker quotes you 1.4951 to buy and 1.4949 to sell. You close your position by buying at 1.4951. You sold at 1.4999 and bought at 1.4951, so your profit is the difference (48 points) multiplied by your stake.

Profit: £5 x 48 = £240

Imagine your prediction is wrong and the pound surges in value to 1.5100, so your broker quotes you 1.5099 to sell and 1.5101 to buy. Because you are concerned it will keep rising, you close your position to limit the damage, and buy at 1.5099. You sold at 1.4999 and bought at 1.5101, so your loss is the difference (102 points) multiplied by your stake.

Loss: £5 x 102 = £510

There is no commission payable for spread betting, as the cost of the trade is covered by the spread itself. However, spread betting does incur other charges, including the following:

Spread betting is our most popular product among both beginners and experienced traders. Our trading platform, educational resources and supportive client services team help our clients truly understand the markets, enabling you to realise your potential and make the most of your trading experience.

We offer spread betting on over 12,000 – shares, indices, forex, commodities, ETFs, treasuries and even our own bespoke share baskets. See our price table below for just a taster of the thousands of instruments we house on our Next Generation platform.