The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

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.

 

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