Commodities Spread Betting Examples

Spread betting the commodities is not different from other markets. A spread bettor can still bet the markets to go up or down in price. The stake sizes are still left up to the discretion of traders.

One difference of commodity spread betting is in point movements. Many financial stocks and shares trade in whole number in the market. Commodity spreads are presented and move in decimal fashion.

It is best to view a few commodities spread betting examples. This helps to fully illustrate and understand this betting concept. A spread bettor can learn a lot by looking at specific examples.

Brent Crude Oil Example

The current spread price on Brent Crude Oil is $70.00-$70.05. A trader can bet on the price to go above $70.05 or below $70.00. In commodity spread trading one bets on every unit as a price move.

A unit of Brent Crude Oil is priced at $0.01 on the stock exchange. One places a wager on every 0.01 of the commodity's price movement.

A £2 wager is placed on the price of crude oil to increase. In fact the market rises to $70.95 within a two week time period. This is a winning spread bet for a spread bettor on a commodity.

The profit is calculated by finding how many 0.01 movements occurred. There were 90 such movements which is multiplied by the wager. The total ending profits of £180 are awarded to the successful trader.

Losing Brent Crude Oil Example

Brent Crude Oil could have fallen in price resulting in a loss. The loss is determined in the same way the profit is calculated. If the price fell and closed at $69.35 the total 0.01 movements is 70.

The number of point movements times the wager is a loss of £140. These are calculated by multiplying the point movement and stake. Therefore, 70 times 2 is equal to 140 as a loss for the trader.

Gold is another commodity which trades in a 0.01 movement point. Gold currently has a spread betting price of 1091.4 - 1091.9. A trader decides to go short or sell the bet at 1091.4 at £1.

The next day the price of Gold rises and continues to rise. The trader closes the bet on Gold at 1099.7 to minimise losses. The loss is the closing market value and subtracting the bet value.

The difference is divided by 0.01 which is multiplied by the wager. In this particular example, the trader suffered a total loss is £83. If the price of Gold had decreased, then a profit would be made.

These examples show how easy it is to learn commodity spread betting. The most difficult thing of spread betting commodities is predicting.

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