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  • Examples of how to spread bet

    On this page we’ll show you exactly how you can take a position through our trading platform. We’ll demonstrate how you can go long and buy Tesco shares and also how you can go short and sell the UK 100.

    Example 1 - going long on Tesco shares

    Step 1. Taking a long (buy) position

    Having researched and planned your trade, you believe that as a result of positive earnings news in the grocery sector, Tesco shares will rise in the next few days.

    Let’s say that, through the Finspreads trading platform, Tesco shares are being offered at a spread price of 325p/326p (sell and buy price).

    You decide to go long and place a trade to buy Tesco shares at 326p (the buy price) for a stake of £10 per point.

    In this case, for every point Tesco shares rise above your buy price of 326p, you’ll make £10 (your spread bet stake).

    Step 2. Closing your long trade

    Scenario 1: the market rises

    Your assumptions were correct. The earnings data is deemed positive by the market, the price of the Tesco shares rise and this helps the price of Tesco shares to rally (increase) to 337p (representing a rise of 11 points from your buy price).

    In order to close your trade you need to sell back your spread bet at the new spread price.

    To do so, you go to the Finspreads trading platform and find that the new spread price offered for Tesco shares is 337p/338p.

    You sell back your trade at 337p (the sell price) for a tax-free* profit of £110 (337p – 326p x £10 per point).

    Scenario 2: the market falls

    Alternatively, let’s imagine your predictions were wrong and the price of Tesco shares fall to 315p (representing a fall of 11 points from your buy price).

    You decide you’d like to close your losing trade rather than risk incurring further losses.

    So, you go to the Finspreads platform and see that the new spread price for Tesco shares is 315p/316p.

    You sell back the spread bet at the new price, i.e. 315p (sell price) and close the trade at a loss of £110 (326p – 315p x £10 per point).

    Example 2 - going short on the UK 100

    Step 1. Taking a short (sell) position

    Having researched and planned your trade, you believe that because of negative economic news in UK, the UK 100 is likely to fall over the next few days.

    Let’s imagine that, through our trading platform, the UK 100 is being offered at a spread price of 6500/6501 (sell and buy price).

    So, you decide to go short and sell the UK 100 at 6500 (the sell price) for a stake of £10 per point.

    In this scenario, you’d profit £10 (your stake) for every point that the UK 100 falls below your sell price of 6500.

    Scenario 1: the market falls

    Your market predictions were correct. The economic data that’s released is worse than investors expected and the price of the UK 100 falls to 6490.

    In order to close your trade you need to buy back your spread bet (as you’d originally sold to open the trade) at the new spread price.

    To do so, you go to the Finspreads trading platform and find that the new spread price being offered is 6489/6490.

    You buy back your spread bet at 6490 (buy price) and net a tax-free* profit of £100 (6500 – 6490 x £10 per point).

    Scenario 2: the market rises

    So what would have happened if you were wrong? Let’s imagine the economic data released is better than you expected and the price of the UK 100 rises.

    In this instance, you’d stand to make a loss of £10 (your stake size) for every point the UK 100 rises above your sell price of 6500.

    In order to close your losing trade, you to go to the Finspreads platform and buy back your spread bet (as you’d originally sold to place the trade) at the new spread price of 6510 (the buy price).

    This would leave you with a loss of £100 (6510 – 6500 x £10 per point).

    Tip:Whether you’re going long or short – you can manage your risk by using stop losses. These help ensure that if prices go against you, your losses are limited to levels that have been pre-set by you.

     

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