Example: Daily FTSE

The best way to understand spread betting is to go through an example. All our bets work in basically the same way, whether you are day trading or taking a more long-term view.

We make a quote for the price of a market at some date in the future, for example, the FTSE 100 in February. You decide whether the market will be higher or lower than our quote by that time. You can also choose bets with a daily timeframe, for example on today's FTSE settlement. This is ideal for day traders who wish to capitalise on immediate volatility.

Suppose you want to bet on the short-term direction of the FTSE 100

Our Daily quote is currently 5672 - 5674

This means you can 'buy' at 5674 or 'sell' at 5672 ('buy' transactions are made at the top end of the spread and 'sells' at the lower end)

We quote

5672 - 5674

Sell

You think the market is going to fall, so you 'sell'. You decide to risk £10/point

You 'sell' £10/point at 5672

The market rises in the afternoon. You decide to cut your losses by closing your bet at our current Daily FTSE price

We quote 5692 - 5694

To close a 'sell' bet you simply 'buy' at the top end

You buy £10/point at 5694

Buy

You think the market is going to rise, so you 'buy'. You decide to risk £10/point

You 'buy' £10/point at 5674

The market rises in the afternoon. You decide to let your bet run to expiry

The FTSE continues to rise towards the end of the day and your bet is closed at the official FTSE closing price

The settlement price is 5698

Loss is calculated as follows:
Closing price	5694
Opening price	5672

Difference	22

You lose 22 x £10 = £220

Profit is calculated as follows:
Closing price	5698
Opening price	5674

Difference	24

You win 24 x £10 = £240