If the FTSE 100 currently stands at 7320.6, we may quote 7320.1-7321.1 for our UK 100 (Rolling Daily) bet. This is a fixed spread of 1 point.
If you believe the price will rise you should BUY (or make an Up Bet) at 7321.1. If you believe the price will fall you should SELL (or make a Down Bet) at 7320.1.
Say you decide to sell at 7320.1 with a stake of £5 per point:
|Stake||£5 per point|
|Stake||£5 per point|
While your position is open you can see your running profit or loss on the trading platform. Your final profit or loss is only realised when you close your position.
To open a spread betting position you put down a deposit, known as ‘margin’. This is calculated as a percentage of the full value of your position. Trading on margin (also known as taking a ‘leveraged’ position) greatly enhances the potential return on your capital, but also creates an equal possibility for losses, if the price moves in an unfavourable direction.
Your initial margin requirement is determined by the margin percentage for the market concerned. You multiply your stake by your opening level to give your position value, and then multiply this amount by the margin percentage. Please note, however, that you may lose more than your initial margin.
With our web-based platform you can reduce your margin requirement by placing a stop-loss on your position, which helps to limit your risk. When you have a stop-loss attached to your position your margin is calculated as 50% of the normal margin requirement, plus your risk per point multiplied by your stop distance (so long as this total is less than the normal margin requirement).
To see the margin percentages for all our markets please refer to the ‘i’ button on the platform or our Market Info tables. You should note that stop-losses are not guaranteed and may be subject to slippage and market gaps in volatile market conditions.
You want to open a £2 per point position on our UK 100 market. The margin percentage for UK 100 (Rolling Daily) is 0.5%, so the initial margin you need to open this position, supposing your opening level is 7000, would be:
|Stake per point||£2|
|Value of position||£2 x 7000 = £14,000|
|Margin required||£14,000 x 0.5% = £70|
You decide to open a £1 per point position on Wall Street with a stop 20 points from your opening level. The margin percentage for Wall Street (Rolling Daily) is 0.5%, and suppose your opening level is 19,800. You would need the following margin to open this position:
In this example you have reduced your initial margin requirement from £99 to £69.50 by attaching a stop-loss to your position.
You can also open your position without a stop-loss and attach a stop to it later. This would also have the effect of reducing your margin requirement on the open position.
Note that, if you choose a large stop distance, so that this calculation exceeds the normal margin requirement, your margin is capped at the normal level, in this case £99.
|Stake per point||£1|
|Value of position||£1 x 19,800 = £19,800|
|Stop distance||20 points|
|Margin required||((£19,800 x 0.5%) x 50%) + (£1 x 20) = £69.50|
*UK taxpayers only. Tax treatment depends on the individual circumstances of each client and may change in the future.