Spread betting - Place the trade

When it comes to spread betting, many people new to the concept don’t understand the short sell. In the spread betting, profits can be made on either rising or falling commodities. And, it may take some time to understand that you can actually make money on falling markets.

The concept works like this –

You might sell short on the FTSE 100 which is currently at 4900 at say £2 per point. If the market goes down then you stand to make a profit at £2 per point it drops. So if it drops to 4850 you will make £100. If the market improves and the FTSE goes up to 5000 then you stand to make a loss of £200. If the market stays static then you neither win nor lose.

Many people can make huge profits when spread betting but at the risk that they might also make a loss. With the current recession hopefully coming to an end there will be more and more traders who will be scouring the marketplace for the next big rise or drop in the market, so don’t miss the boat, do some research and place the trade.