Why Spread Bet with City Index?
Tight, fixed spreads
What is Spread Betting?
Financial Spread Betting allows you to trade on price movements on a wide range of financial markets including FX, Indices, Shares and Commodities. When you Spread Bet, you can trade on both rising and falling prices allowing you to take advantage of shorter term trading opportunities as market prices fluctuate. Because you are trading on price movements rather than owning actual assets you also do not have to pay UK Capital Gains or Stamp Duty on any profits you earn.
How to Spread Bet
Choose a market
Decide which market you want to trade on. Why not use our trading tools to find trading opportunities.
Place the trade
Choose how many pounds per point you wish to stake on your trade. Click 'buy' if you think the price will increase in value or 'sell' if you think the market will fall in value.
Add a stop-loss
A stop-loss is an order to close your position out if the market moves too far against you.
Monitor and close your trade
Once you have placed your trade, you see your profit/loss update in real time. Exit your trade by clicking the 'close trade'.
Cost of Spread Betting
Spread Betting has lowered the cost of entry to the financial markets and is one of the most cost efficient ways to trade.
- The difference between the buy and sell price reflects the cost of trading
- Remember, spread betting is a margined product
- This magnifies your potential profit as well as your loses
- Financing may be charged for position held overnight
- Guaranteed stop loss fee charged if triggered
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Benefits of Spread Betting
Tax-free profits & no commission
All profits made from Spread Betting are exempt from UK Capital Gains Tax and UK Stamp Duty*. Spread Bets do not incur any commission.
Trade on margin
A Spread Bet is a leveraged product, this means that you only need to deposit a small fraction of the overall value of any trade, known as margin. For example, if the margin requirement for a trade is 10% then you would need 10% of the full value of the trade in your account to open the position.
If you were Share dealing, you would have to put forward the full amount of the value of the trade.
Ability to go long or short
Spread Betting is one of the few forms of financial trading that enables you to profit from falling market prices. So you can potentially make a profit regardless of the direction in which the markets are moving.
If you think the markets are going to rise, you go long on the price (buy). Your profits will rise in line with any increase in that price (and your losses will increase in line with any fall in price).
If, on the other hand, you think the markets will fall you go short on the price (sell). Your profits will rise in line with any fall on that price (and your losses will increase with any rise in price).
Short term trading opportunities
Where traditional investors might buy and hold physical stocks over months or even years, with Spread Betting you can benefit from shorter-term market volatility.
Typically, traders look to hold positions over minutes, days and weeks rather than over the longer term as Spread Betting presents more short term trading opportunities and the low costs also facilitate a short-term trading style.
Trade on a wide range of markets
When you Spread Bet you will have access to a much wider range of markets than with traditional forms of investing, including commodities, currencies, indices and bonds.
We’ve summarised these key differences between Spread Betting and shares dealing in the table below so you can discover which form of trading is most suitable for you.