Welcome to next generation trading

A guide to financial spread betting

When you place a financial spread bet, you simply choose whether the price of a product is likely to go up or down and how much you want to stake per point. If the market moves in your favour you will make a profit, and if it moves against you, you will make a loss. Your profit or loss is the difference between the price you buy at and the price you sell at, multiplied by your stake.

How to spread bet:

If you bet £5 per point on a company and the price rises 20 points you would make (£5x20)=£100. But if it falls 20 points you would lose £100.

As you do not actually buy or sell a physical product, but spread bet solely on a price movement, you can potentially make profits (or losses) from falling markets as easily as rising markets.

Financial spreads explained

Prices of financial instruments are quoted in pairs. The sell price is quoted first and the buy price is quoted second. The spread is the difference between the sell and the buy price.

When opening or closing a spread bet, you buy at the higher price and sell at the lower price.

Benefits of spread betting

• Tax free profits. Unlike share trading, profits made from spread betting are exempt from capital gains tax (CGT) in the UK. Also, because you are not buying the underlying product, stamp duty will not apply. Tax treatment depends on your individual circumstances. Tax law can change or may differ in a jurisdiction other than the UK.
• Cost efficient. Spread betting is exempt from many of the costs that you have to pay when you trade shares with a stockbroker. For example, spread betting with CMC Markets is commission free and there are no account maintenance charges.
• Profit from falling markets. You can spread bet on the price of the product falling or rising. Spread betting on the price falling is called ‘going short’. This gives you the opportunity to profit from a fall in the product’s price by selling high and buying back cheaper if the price falls. However, if the product’s price rises you will make a loss on the trade.
• Spread bet global markets. With financial spread betting, you are not just restricted to spread betting shares. You can spread bet on thousands of global instruments including companies, indices, commodities and currencies.
• Trade with leverage. Financial spread betting is a leveraged product which means you only have to commit a small proportion of the total amount that you would traditionally use to buy shares. Margin rates typically range between 1% to 20% of the total value of the bet. This leverage allows you to control a position in the market with a smaller amount of money than you would need for physical securities.
  
  

  In addition, with our new transaction based stop loss function the platform will set a stop loss for every new bet you open. This stop loss is equal to the margin requirement for that bet.

  Please remember that trading on margin is an efficient use of your capital but the downside is that it can increase your risk and you may lose more than your initial deposit.

• Start spread betting with just £200. You can open an account online and start spread betting with a minimum deposit of £200.

Spread betting financial markets

Spread betting can be a low cost way to start trading new markets that you might not have considered before - such as international companies, indices, commodities or currencies.

Financial spread betting with CMC Markets

CMC Markets specialises in offering our UK customers financial spread bets and we have won many awards for our service.

For those new to spread betting, CMC Markets offers:

• Free demo account to practice on
• A simple, easy to use trading platform
• 24 hour customer support whenever the markets are open
• Risk management features such as transaction based stop losses

For spread betters:

• No requotes
• 100% automated execution – no dealer intervention
• Customisable trading screen layout
• Spread bet from charts and watchlists
• Exclusive to CMC Markets - new simplified commodities

Spread betting is only available to residents of the UK and Ireland. If you live outside of the UK, you may wish to contact your regional CMC Markets office for an account and support in your local language. CMC Markets offers trading in the form of contracts for difference (CFDs) and spot FX outside of the UK and Ireland.

New to spread betting?

If you’re new to spread betting and want to test the water before you start spread betting there are a number of things you can do to check if it’s right for you.

• Apply for a demo account. Our spread betting demo account gives you a chance to test out our trading platform and trade with £10,000 of virtual money. You can use it to get a feel for how the markets are moving, how our online platform works or even use it to test out trading strategies. Our demo account only takes 60 seconds to sign up for and there is no download involved.
• Watch the videos. Tour our online trading platform with a short video of our spread betting platform. Our video will show you how to search for prices, place an order and a stop loss, use a chart and monitor your account value.
• Talk to your account manager. When you open an account with CMC Markets you’ll get a spread betting account manager. They can help you get started - whether it’s teaching you more about how spread betting works or just being there to answer your questions. Please note that account managers cannot provide you with trading or investment advice.

Risk warning

Spread betting, CFDs and FX are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

The content of this website relates to CMC Markets' new trading platform and is not relevant to the Marketmaker trading platform.  For information relating to the Marketmaker trading platform please visit our Help pages.