Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Spread betting is a leveraged financial derivative. When spread betting, you are making a bet on the direction in which a market will move. The accuracy of your bet determines the profit or loss when the position is closed.

Spread betting definition

Spread betting is a leveraged financial derivative. When spread betting, you are making a bet on the direction in which a market will move. The accuracy of your bet determines the profit or loss when the position is closed.

When opening a spread betting position, you decide how much you would like to bet for each point of movement in an asset. Buy positions return a profit if the market increases in price, sell positions return a profit if it drops in price. The profit or loss at the close of the trade is calculated as:

Profit or loss = (£ bet per point x points moved) - charges to open and maintain position

Spread betting is a leveraged product, meaning you only need to put down a fraction of the full value of the trade in order to open a position. The margin required depends on the market being traded and size of the bet.

The spread

All spread bets include a spread that wraps around the price of the underlying market. Buy prices are always slightly higher than the market price, sell prices slightly lower. The cost of opening a trade is reflected in the spread.

 

Investing news

Visit our investing news section for the latest news and analysis, and where potential investment opportunities may lie.

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms