Spread Betting Examples

When you place a spread bet on any market, you are staking a fixed amount per point movement in the market price.

If you are buying (going long) you will make a profit if the price rises and a loss if the price falls. If you are selling (going short) you will make a profit if the price falls and a loss if the price rises. The amount of your profit or loss is calculated as your unit stake multiplied by the number of points the price has moved.

Say our price for EUR/USD is 1.3125-1.3126. This quote is based on the interbank market spread, plus our dealing charge. You decide to go long of the euro by buying at the offer price of 1.3126.

You now choose how much you want to stake per pip on this position, in the underlying instrument currency (the second-named currency of the forex pair). In this example let’s say you stake $100 per pip/point.

This means you will make $100 for every pip that EUR/USD rises above your opening price of 1.3126, and lose $100 for every pip the market falls below this price.

Say the price rises to 1.3183-1.3184 and you decide to sell. You close your position by selling $100 per pip at the bid price of 1.3183.

Your realised profit on this position is: 1.3183 – 1.3126 x $100 per pip = $5700.

The standard margin to open a forex position can be as low as 1% of the full contract value. To calculate the minimum margin required you multiply your exposure per pip by the IMR (see our full market info). In this case the IMR is 40 and your exposure is $100 per pip, so therefore the minimum margin is $4000. (Greater leverage may be available on application, depending on the nature of your business.)

Say our quote for the CAC 40 is 3177.3-3178.3. This quote is derived from the near-month futures contract for CAC 40, and includes our dealing charge. You decide to sell the index for €50 per point at the bid price of 3177.3. (As above, your stake is placed in the underlying instrument currency and your profit or loss is automatically converted into your account currency if necessary.)

You will now make €50 for every point the CAC 40 falls below your opening price of 3177.3, and lose €50 for every point the market rises above this price.

Our quote now rises to 3223.5-3224.5 and you decide to cut your losses. You close your position by buying €50 per point at the offer price of 3224.5.

Your realised loss on this position is: 3224.5 – 3177.3 x €50 per point = €2360.

Minimum margin requirements differ by market. To view the rates for specific markets (along with details of our spreads, contract sizes and financing for overnight positions) please check out our full market info sheet.