There are a number of costs to consider when trading on share baskets, including spread costs, holding costs (for trades held overnight) and guaranteed stop-loss order charges (if you use this risk-management tool). Learn more about our costs
When you spread bet or trade CFDs on share baskets through our platform, you don't buy or sell the underlying shares. Instead, you're taking a position on whether you think the instrument's price will go up or down.
With spread betting, you buy or sell an amount per point movement for the instrument you're trading, such as £5 per point. This is known as your stake.
With CFD trading, you buy or sell a number of units for a particular instrument. For every point or unit that the price moves in your favour, you gain multiples of your stake.
You can find all the information about how our share baskets are created in our share baskets methodology. View our share baskets methodology
Dividends are cash payments made to shareholders out of a corporation's profits. Typically, corporations will make regular periodic dividend payments throughout the financial year (quarterly, semi-annually or annually) and will therefore be classed as ordinary cash dividends.
When a stock goes ex-dividend, the value of that stock effectively falls by the dividend amount. This means if you hold a spread bet or CFD position on a company which announces a dividend, your account will be credited or debited on the day the stock goes ex-dividend.
If you were long (holding a buy position), you would have been disadvantaged by the drop in the market caused by the pay out of the dividend, so we would credit your account with the dividend amount, less any applicable dividend withholding taxes. If you were short, you would benefit from the drop in the price, so the equivalent amount would be deducted. So, overall, you don't lose or gain anything from the adjustment. There are no withholding taxes on short positions. The dividend will appear as a 'price adjustment' in your account history within the platform.
For share baskets, any ordinary cash dividend events will be treated as a price adjustment within the share basket. On ex-date the share price of the share basket component will decrease by the approximate value of the gross ordinary cash dividend. This will in turn result in an equivalent adjustment to the overall share basket price based on the weighted average of the share basket component. A cash adjustment will then be made to the holder of the share basket for the net ordinary cash dividend value.
Special cash dividends are dividends that are paid outside of the regular periodic dividend payments of a corporation. These are typically one-off payments that are derived from excess funds within a corporation, such as profit or the sale of assets. Any special cash dividend events will be treated as a price adjustment within the share basket. On ex-date, the share price of the share basket component will decrease by the approximate value of the gross special cash dividend value. This will in turn result in an equivalent adjustment to the share basket price based on the weighted average of the share basket component. A cash adjustment will then be made to the holder of the share basket for the net special cash dividend value.
Dividend reinvestment plans (DRIPs) and scrip dividend schemes are optional dividend events that allow shareholders to choose between receiving their ordinary cash dividends in the form of a cash dividend payment or alternatively re-investing the cash dividend back into shares in the corporation from which the dividend originated, with the shareholders then receiving new shares in place of the cash dividend payment. Any optional dividend event will be treated as an ordinary cash dividend event and will therefore result in a price adjustment within the share basket. On ex-date the share price of the share basket component will decrease by the approximate value of the gross dividend value. This will in turn result in an equivalent adjustment to the share basket price based on the weighted average of the share basket component. A cash adjustment will then be made to the holder of the share basket for the net dividend value.
You can lose all of your capital – leveraged trading means that both profits and losses are based on the full value of the position.
Risk of account close-out – market volatility and rapid changes in price can cause the balance of your account to change quickly, and if you don’t have sufficient funds in your account to cover these situations, there is a risk that your positions will be automatically closed by the platform.
Market volatility and gapping – financial markets may fluctuate rapidly, which can result in market gapping. This may mean that stop-loss orders are executed at unfavourable prices.
Sector risk – it's possible that the shares of many companies in the same sector will fall in price at the same time, due to an event that impacts the industry as a whole.