Forex Spread Betting Examples

This example takes you through a short-term position on one of our most popular forex markets.

On the morning of 26 September 2012 our EUR/USD price stands at 12881-12881.8.

You believe the euro will rise against the dollar over the short term and decide to 'buy' £10 per point at the offer price of 12881.8.

Against your expectations, the euro falls against the dollar later that morning. Our quote is now 12870.5-12871.3 and you decide to cut your losses. You 'sell' £10 per point at 12870.5 to close your position.

The Result

This example takes you through a short-term position: 'selling' spot EUR/USD with a trailing stop.

On the morning of 26 September 2012 our EUR/USD price stands at 12881-12881.8.

You believe the euro will fall against the dollar over the short term and decide you will 'sell' £10 per point at the bid price of 12881.

To limit your risk, and without having to monitor the EUR/USD price constantly, you want to use one of our risk management tools. You could place a stop order to close the position at a less favourable level. This would close you position if the price moved against you.

However, if the price moves in your favour this stop won't lock in profit. A trailing stop, however, tracks your profitable positions automatically. In this case, it would track downwards if the EUR/USD price were to fall.

You 'sell' at 12881 and place a trailing stop at a distance of 20 points (12901), set to move down in increments of 5.

The euro weakens against the dollar during the day, driving our price down to 12837.1-12837.9. This is a fall of 43 points. Your trailing stop therefore moves by 40 points to 12861.

By mid-afternoon, the price begins to move against you, but the level of this trailing stop stays in place. When the EUR/USD offer price rises to 12861 your trailing stop is activated, closing your position at 12861.

The Result