Spread betting is a popular method in the UK to speculate on the rise or fall prices in financial markets. In this spread betting guide, I’ll share some examples of spread betting and help you place your first bet.
What Are The Five Steps To Spread Betting?
1. Learn How To Spread Bet
Spread betting lets you speculate on price moments in financial markets without owning the underlying asset. This form of derivatives trading (betting) is attractive as it allows you to profit on rising or falling markets provided you predict the direction of the prices correctly.
If you think the market price will rise, you will bet long (buy) and profit every time the market rises one point. Equally, if you think the market will fall, you can short (sell) the market and profit for every point the market falls.
One aspect of spread betting that may appeal is that it has leverage built-in. This means you only need to deposit a small margin to control 100% of the asset, allowing you to magnify your profits while amplifying your losses.
2. Create And Fund A Spread Betting Account
Once you have the fundamentals down, it is a good idea to research which is the best-spread betting broker to open an account. You want a broker that offers an easy-to-use spread betting platform, low spreads and betting with your desired market. Extra features like free trading tools or VPS hosting services are handy but not essential.
After you have chosen your broker, you will need to fund the spread betting account. Fortunately, most brokers have a low minimum deposit to open an account.
To fund your account, you can go to your spread betting broker’s account settings and initiate a deposit. Depending on your funding method, your funds should be processed and ready to spread bet immediately.
Alternatively, if you are not ready to fund your account with real money, you can open a spread betting demo account, which gives you virtual money to bet on the markets.
3. Create A Trading Strategy
A trading strategy for spread betting the markets is essential for your success; otherwise, you are just gambling. You can develop your spread betting strategy that fits how you want to bet. If you want a technical analysis-focused strategy, you should choose to use technical indicators, charts and candlestick patterns.
I like to use a hybrid strategy to get an overall financial market bias using fundamentals to give me an idea of where the overall spread betting market is heading. Then, I will use technical analysis to find betting opportunities going in the same direction as my fundamentals.
For example, if the US GDP is expanding, along with its other economic data points, my overall theme will be to bet long on US stocks and indices. I will then use technical analysis to time my bets on indices or US stocks to bet long on.
4. Choose Your Spread Betting Platform
You can choose from various spread betting platforms, such as the MetaTrader 4 platform, which has a clean design and customisable charts. The MetaTrader 5 platform is ideal if you want to automate your spread bets, as it has expert advisors that can be coded to follow your betting strategies. If you want a platform with excellent charting capabilities that works on any device, then TradingView would be an ideal choice.
I like to use TradingView because it has an impressive range of indicators built-in, including those not available on other platforms, such as the Hull Moving Average. Because TradingView syncs all of its software across multiple devices, allowing me to continue trading while I’m away from the computer. Compared with MT4, that doesn’t sync the charts, so I’d lose all of my indicators and price levels if I’m away from the computer, making it harder to analyse markets.
5. Open, Monitor And Close Your First Position
When you are ready with your strategy and have found a potential idea, you will be ready to place your first bet. To do this, you will open a dealer ticket by selecting buy or sell on the asset you want to bet on. Then, complete your ticket by placing your stake size; you can add your stop loss and take profit on the same deal ticket if you wish. Once you have set up your deal ticket, you select “Place bet” button and the broker will accept your bet, making it live.
Below is an example deal ticket using the MetaTrader 4 platform. You should note that the deal ticket will look different on every platform but all function similarly.
You can monitor it by looking at the Open Positions section of your account, and here, you can also amend your order with a stop loss or take profit order.
To close your position, you will find that most platforms have a simple “close” (or a cross) button next to your open trade. Click that, and you’ll exit your position with the profit (or loss) you made during the bet.
Spread Betting Examples
Understanding how spread betting works and how much risk and margin you’ll use is a good idea. Most spread betting firms will price the markets in points instead of the actual price, e.g.) the broker will price Apple shares at 17000 instead of $170.00. Or the broker will price the spread betting market of EURUSD to 10950 instead of 1.0950. This makes it easier for you to follow the point spread betting movement.
If you are switching from CFD trading, this is one of the first things you will notice about the spread betting market. In addition, when you open a spread bet, you input the stake size (how much you want to wager) instead of inserting how many shares/units you want to bet.
For example, instead of placing a buy order of 0.20 lots to buy 20,000 units of EUR/USD, I simply enter £2 as my stake size. I prefer this way of betting on a financial market as it is clearer for me to know my potential profit and loss for every point movement.
Shares: Spread Betting Example
Below, I will go through an example of an Apple spread bet, but you should note that each share has different price per point spread betting movements for you to stake (wager) on, especially if you want to bet on shares from different countries.
Apple: Winning Spread Bet
Based on analyst forecasts on the upcoming iPhone and Apple Watches, you think Apple’s share price will rise. You open a spread bet at $174.47 with a £1 stake per point spread bet movement on Apple’s share price, meaning you will profit or lose £1 for every $0.01 Apple moves.
Three days later, Apple has risen from $174.47 to $181.11 on the back of the latest iPhone pre-order demand (which was better than expected). This means that the price has moved 664 points (189.65-173.96), and in this bet, you will have made £664 profit (£1 x 664 points).
Apple: Losing Spread Bet
You like the technicals of Apple and think that the markets will be lower in the short term. So you decide to short Apple at $151.59 with a stake of £1 per point spread bet.
Unfortunately, several days later, Apple reversed the small downward move and hit your stop loss, which was placed at $155.82, forcing you out of the short bet at a loss. In this scenario, you lost 423 points (155.82 – $151.59), and at £1 per point, that would be a £423 loss.
Forex: Spread Betting Example
One of the most popular markets to spread bet on is forex, and I will share two examples of betting on the GBP/USD. Betting on forex is straightforward (especially if you’ve traded CFDs), and the point movement in each currency pair is one pip (0.0001).
GBP/USD: Winning Spread Bet
You are watching the price of GBP/USD shoot up, but you think that the market is reactivating too positively, so you look to place a short. You look to place a short at 1.2940 with a stake of £1 per point moved with the hopes for the market to fall further.
You hold on to the bet for several days and want to profit now that the GBP/USD is 1.2700. You managed to exit the bet at 1.2709, making you 231 points (1.2940 – 1.2709) profit, and because you staked £1 per point, this made you £231 profit.
GBP/USD: Losing Spread Bet
You’ve been watching the GBP/USD for the past few days, and you’ve seen the GBP/USD plummet, so you decided to get in on the action by shorting the GBP/USD at 1.1481 with a stake size of £1 per point thinking the downward pressure continues.
The market immediately finds its feet and has edged higher over the last few days. With this in mind, you close the position, taking the loss and exiting at 1.1754. In this example, you lost 273 pips, or £273.
Forex Spread Betting Calculator
CompareForexBrokers has developed a spread betting calculator that you can use to figure out your profit and loss using real-time pricing. You can check out the spread betting calculator here.
Indices: Spread Betting Example
All spread betting brokers have indices markets available covering a range of markets from the US500 to the DAX40. When spread betting indices, the point movement is one point (the last digit of the price on the index). Below, I’ll compare two more examples using the FTSE 100 (the UK100 on spread betting platforms).
UK100: Winning Spread Bet
You’ve been doing your technical analysis on the FTSE 100 and noticed a nice area of demand where the price respected the supply zone that had formed above the 7000 level. You decide to bet long on the FTSE 100 at 7178 for £5 stake per point because you think it will rise now.
You were correct with your analysis, and the markets rallied over the next week when you decided to close the bet at 7380.70. This generated 292.70 points profit (open price: 7178 – close price: 7380.70), or £1463.50 (£5 x 292.70).
UK100: Losing Spread Bet
In this example, you thought the FTSE 100 would continue falling based on bearish movements in the last few weeks. Because of the recent drop, you shorted the FTSE 100 at 6973.90 at £5 stake per point.
After a couple of days, the FTSE 100 reversed and erased some of its losses from earlier in the week. This scared you as you believed you caught the bottom of the move, so you decided to cut your losses exiting at 7194.60, meaning you took a loss of 220.70 points (7194.60-6973.90), or £1103.50 loss (£5 x 220.7 points)
Commodities: Spread Betting Example
There is also a wide range of commodity markets, from coffee to wheat and gold to platinum. Most brokers have an excellent range of commodities to bet on but may offer different point values for each commodity point movement value is different.
Gold: Winning Spread Bet
In this example, you have monitored gold’s recent push higher after a poor-performing week. You noticed a pullback after a strong reversal, so you took this as an opportunity to buy gold at $1590.43 at £2 stake per point.
Your analysis was correct, and the market picked up the pace after the pullback, moving higher and breaking above the $1700 level. You decided to take your profit off the table and closed the bet at $1711.18, which meant you generated 120.75 point move ($1711.18 – $1590.43), making you a profit of £241.50 ( £2 stake x 120.75 point move).
Gold: Losing Spread Bet
In this example, you monitored the RSI and saw that gold was above 70, which signalled to you that it was over-bought, especially after its previous bull 20-day run. You saw an opportunity and decided to short gold at 1408.59 with a stake of £1 per point.
Unfortunately, you got trapped, and gold continued to push higher to hit your stop loss at $1425.16. This bet turned into a 16.57 point loss, making you lose £16.57. Learn more on our gold spread betting page.
Best Spread Betting Brokers
Pepperstone – Best Spread Betting Broker Overall
Pepperstone is our top pick for spread betting brokers with its low spreads, solid selection of spread betting platforms, and an excellent range of markets that allow you to bet on most markets. Platforms available to bet with the 62 forex pairs, 25 commodities (including gold), 1000+ stocks and 28 indices include MetaTrader 4, MetaTrader 5, cTrader and TradingView.
All trading platforms come with a demo account, sign up with Pepperstone is super straightforward and our tests show that execution speed with this broker is one of the fastest.
City Index – Great Broker For Guaranteed Stop Loss Orders
We are fond of City Index for their excellent City Index WebTrader platform and app. Advanced risk management is available thanks to their guaranteed stop-loss orders (GSLO) and exclusive analytical tools like Performance analytic and Smart Signals along with TradingView charts are also available. Some 84 currency pairs, 4,500+ stocks, 30 commodities and even options, bonds and interest rates can be bet on.
IG Group – Best For Range Of Markets Overall
We like IG Group because it has the largest selection of spread betting markets available. Over 17,000 products are available and includes options, futures, IPOs, thematic baskets bonds and even interest rates in addition to the usual Forex, indices, commodities and shares.
Betting can be done via IG Trading Platform (which includes a GSLO), ProRealTime (good for chatting and automation) and MT4 (which does everything well). If you want to bet on multiple markets with low spreads and fast execution speeds, then IG is our top pick.
FXCM – Good MetaTrader 4 Spread Betting Platform
FXCM is a solid choice if you want to spread bets with MetaTrader 4. We chose FXCM since they allow scalping and hedging and like all MT4 brokers, automation thus allowing you to take full advantage of the capabilities of MT4.
Automation is one of the features that makes FXCM standout from other brokers. Spread betting can be done using Capitalise.ai which allows you to easily build your own automated betting strategy without the need to learn coding or with Trading Station. This platform allows integration with APIS like Java, FIX and ForexConnect for better automation and backtesting.
Pair all this automation with its range of markets and competitive spreads (starting fr0m 0.78 pips) and FXCM would be a top choice to automate your trades.
OANDA – Best For Spread Betting Beginners
If you have just started spread betting then you should check out OANDA, it’s our top-rated broker that is ideal for beginners.While you can spread betting is available with MT4 and TradingView, we recommend The OANDA Trade platform and app.
Oanda Trade has an intuitive platform that is easy to navigate, but features that make the platform stand out for beginners are
- A guaranteed stop loss order is available for risk management
- TradingView charts are incorporated into the platform
- Betting can be done with the smallest stakes sizes.
The latter is helpful when you transition from a demo account to a live account, allowing you to risk small bets and gently scale up to larger bets when you are confident.
Spreads with OANDA start from 0.8 pips and include 70 Forex pairs , Gold vs 10 fiats and Silver, Silver vs 10 fiats along with commodities and indices.
CMC Markets – Top Forex Pairs For Spread Betting
Another solid choice for spread betting is CMC Markets, which has an intuitive trading platform with an extensive range of markets (10,000+). We particularly like that the broker’s spread betting platform has advanced trading tools, such as pattern recognition software, to help you find trading ideas throughout the day.
Choosing CMC Markets means you can spread bet with over 300 forex products, 82 indices, 9000+ shares and ETFs and 124 commodities. Spreads start from 0.8 pips for the EUR/USD major forex pairs.
Spreadex – Best Broker With Financial And Sports Spread Betting
If you want to use sports spread betting and financial spread betting then we recommend using SpreadEx. The broker offers an extensive sports betting market covering major sports and events with excellent fixed odds. Then when you are ready to place your financial spread bets, you can use SpreadEx’s excellent trading platform that also provides automated Pro Trend lines and pattern recognition tools.
FxPro – Best Spread Bet Trading App
We rated FxPro’s mobile app highly with its 15-time frame, market sentiment analysis tools, and 50+ technical indicators. Combine this with FxPro’s fast execution speeds and low spreads, and you have a decent betting environment while you are on the move. If you have to analyse the markets on the go, the FxPro Trading mobile app makes an excellent companion.
70 Forex pairs are available for betting including 10 with the option as fixed spreads. Other products for betting include shares, commodities, agricultural commodities, energies and indices with the latter 3 also available as futures.
How To Get Started Spread Betting
Spread betting the markets has a low entry barrier but requires a decent understanding of the markets you want to bet. If you want to start spread betting, I suggest you practise on a demo account until you are familiar with the markets and develop a trading strategy. Then, open a live trading account with your broker and start by staking the smallest amounts to ease your way into trading with real money.
Risk Management When Spread Betting
Each spread betting platform has the standard risk management tools you should utilise while spread betting, especially if you are a beginner. The most common risk management tool is the stop-loss order, which automatically closes your bet at a price you define if the markets move against your betting direction. This tool is useful as it eliminates the need to monitor the position as you will know your maximum loss.
FAQs
What Are The Costs Associated With Spread Betting?
The main cost with spread betting is the spread you pay the broker to enter the markets. The betting spread is the difference between the bid (sell) and ask (buy) price, if EUR/USD bid 1.0001 and ask was 1.000, then the betting spread is one pip. This means that if you stake £10 per point (pip), the spread cost would be £10 to open the bet.
If you hold positions over 22:00 UK time, you will be charged a rollover fee based on an interest for the position to remain open – this fee varies depending on the broker and asset you are betting on.
Is There A Minimum Deposit Size?
Some brokers like Pepperstone and OANDA don’t have a minimum deposit. however, you will need to meet the margin requirements to open a trading position. Learn more about the role of leverage on our spread bet margin page.
How Do I Make My First Deposit?
Each broker has an account section on the platform where you can deposit multiple methods, including bank transfers, money wallets like SKRILL, and debit cards. Which broker you choose to spread bet with will depend on what your minimum deposit will be. Some brokers offer no minimums, and others can be as high as £500.
What You Need To Verify An Account?
To verify your account with a spread betting company, you will complete a fact-find questionnaire and provide proof of address and ID documents. This will include questions about your employment, trading experience, and source of funds.
Practical Examples For Beginner Traders
Understanding examples is crucial, especially for those just starting out. Our Beginner’s Guide is a comprehensive resource that covers the A to Z of spread betting. It’s an essential read for retail investor accounts that are new to the game and want to understand the broader landscape.
Examples Backed by Statistics
Examples provide the practical know-how, but what about the numbers that back them up? Our Statistics page is your go-to resource. It’s a deep dive into the trends and odds that every active trader should be aware of. Trust me, it’s like having a cheat sheet for the financial market.
Diversifying Examples with Bonds
If you’ve grasped the examples and are looking for other avenues, why not consider bonds? Our Bonds guide offers a comprehensive look into how you can diversify your portfolio. It’s particularly useful if you’re already into margin trading and are looking to spread your wings.
From Examples to Success
So you’ve gone through the examples and are feeling confident. What’s the next step to becoming a successful trader? Our How to Succeed guide is packed with tips and strategies that can elevate your trading game. Whether you’re into CFD trading or focusing solely on spread betting, this guide is a must-read.
Spread Trading Examples
If you’ve mastered the examples in spread betting, perhaps it’s time to look at other financial instruments like currency pairs. The What is spread betting section can help you navigate the concept and understand how it compares to forex trading.
