Spread Betting Examples

Spread betting involves numbers in a spread, market price, and wager. It is not too complicated to understand but can be daunting. Seeing a few examples can help the spread bettor understand.

Ashtead GR Trade

This example shows a trade for Ashtead Gr. Ashtead Gr closed at 100. The spread betting firm is offering a betting spread of 100-102. This means the firm predicts the closing price will be 100 and 102.

An investor predicts the closing price will be higher than 102. So the investor places a buy bet on the high spread number 102. The wager placed by the spread bettor is £2 per point spread.

At the end of the next trading day, Ashtead Gr closes at 105. There is a 3 point spread difference in favour of the investor. The £2wager is multiplied by the 3 point difference with a £6 profit.

A different investor does not agree with the first investor. This investor predicts the market for Ashtead Gr will decrease. This trader spread bets the share will close at 100 and sells.

The bet is £2 per point and is determined entirely by the trader. The market closed the next day at 105, there is a 5 point difference. This investor's wager of £2 is multiplied by 5 and loss totals £10.

One can see the potential profits and losses can vary greatly. Profits and losses depend on the point spread and wager size. For this reason, a trader may need to carefully select one’s wager.

Evolution Grp Example

Another betting example is Evolution Grp which closed at 76.25. The spread betting firm offers a tight spread of 75.25 - 76.25. The following day the market price of Evolution Grp fell to 72.25.

The first investor made a buy bet of £10 per point on the spread. The point difference was 4 (76.25 - 72.25) and this was multiplied. It was multiplied by the wager of £10 results in a loss of £40.

If this wager was smaller, say £2, the loss would have been lower. The second investor places a sell bet on 72.25 with a wager of £1. The difference was 3 (75.25 - 72.25) and multiplied by the £1 wager.

This investor made a profit of £3 on this spread betting example. If this wager was £10, the profits for the trade would have been £30.

As is evident, betting profits and losses can be wide and varied. The fluctuations in the market add to the unpredictability of results. Spread betting wagers also have a huge impact on trading results.

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