The concept of spread betting is simple. If you think a market is set to rise you 'buy' at the top end of our quote (the offer price), or if you think the market will fall you 'sell' at the bottom of our quote (the bid price).
Your position is a bet and therefore free from capital gains tax*: you never actually own the instrument you are 'buying'.
The difference between the bid and offer prices is known as the 'spread'.
How it works
When placing a bet on our PureDeal dealing platform you will essentially follow these steps:
Quick Guide to Spread Betting
Select your market, for example
FTSE 100, EUR/USD, or Daily US Light Crude
Quick Guide to Spread Betting
Decide whether you think the market will rise or fall - 'buy' at the upper end of the quote if you feel the market will rise; or 'sell' at the lower end of our quote if you believe the market will fall.
Quick Guide to Spread Betting
Monitor your bet, as you have the option to close it any time up to the expiry time
Quick Guide to Spread Betting
The bet closes either because it’s reached its designated expiry, or you have chosen to close it before expiry. When you close your bet, you perform the opposite action to when you opened the bet i.e. if you chose to 'buy' originally, then you would 'sell' at the lower end of our quote at that time to close your position, and vice versa.
This a simplified summary of how to spread bet, and there are other factors to consider, not least taking measures to help place a cap on any potential loss you could make – see 'Learn about risk' below. Before you begin, you can also take steps to become better informed about spread betting markets. Find out
how we can help.
In addition, our examples provide a bit more detail to help demonstrate how spread betting works in practice.
PureDeal
More than 90% of our deals are transacted online through our PureDeal dealing platform, which offers professional level capability. PureDeal is equipped with a full range of free dealing tools and charting, up-to-the minute news and research.
The size of the bet which you place through PureDeal is entirely your choice, providing you meet the minimum size for that market. If you 'buy' at £5 per point, for example, this means you make £5 for every point the price goes up and lose £5 for every point it moves down.
Learn about risk
It is important to understand the risks involved before you begin. This is because, as spread betting is a leveraged product, it can result in losses which exceed your initial outlay. Find out more about the types of risk and how you can use effective risk management tools to help manage them. Or if you're ready to start spread betting now, you can open an account online in minutes.
*Tax law can be changed or may differ depending on your personal circumstances.