Put simply, if you believe a market price will go up, you buy that market known as going long. If you believe it will fall, you sell the market going short. What is a stake size? When you spread bet you decide how many pounds you wish to stake per point movement of the market you wish to trade.
Spread Betting is a leveraged product which means that you are only required to initially deposit a small amount of money to place a trade. However, the higher the stake, the more money you need as a deposit known as margin to place that trade. It is important therefore that you make sure you have enough funds to place the trade.
For example, if the UK was trading at The margin requirement is calculated as:. It is also equally important that you have enough funds in your account to help cover any likely price moves for the duration of your trade. Learn more about how margin works. Adding a stop loss or placing a limit order An order is an instruction to automatically close your trade at a point in the future when prices reach a specific level predetermined by you.
You can utilise stop and limit orders to help ensure that you lock in your profits and minimise your risk when your respective profit and risk targets are reached. A stop loss order is an instruction to close out a trade at a price worse than the current market level and, as the name suggests, is used to help minimise losses. City Index offer different types of stop loss orders. A standard stop loss order, once triggered, closes the trade at the best available price.
There is a risk therefore that the closing price could be different from the order level if market prices gap. A guaranteed stop loss however, for which a small premium is charged upon execution, guarantees to close your trade at the stop loss level you have determined, regardless of any market gapping.
A limit order is an instruction to close out a trade at a price that is better than the current market level and is used to help lock in profit targets. Standard stop losses and limit orders are free to place and can be implemented in the dealing ticket when you first place your trade or attached to a trade after you have opened it.
Learn more about risk management. Closing your trade When you are ready to close your trade, you need to do the opposite to what you did when you opened your position. Select the 'close position' option within the positions window. By closing the trade, your net open profit and loss will be realised and immediately reflected in your account cash balance.
This will be done for you if your stop loss or limit order is automatically triggered. Of course if you manually close your position your stop loss will be cancelled. Traditionally, this index is traded via the futures market and is called the SPI contract. The ASX , sometimes known as the Australia , is a lively index that can be provide ample spread betting opportunities.
At present the rolling daily bet quotation is You hang on for a few days, watching the index steadily climb, and finally decide to close your bet when it reaches The bet closes at the value of The amount you have won can be worked out from the point difference and the amount of the stake, like this: —.
The point difference that you have gained is This is This index is volatile, and could have gone down instead of up after you placed your initial bet. If it did, you would have lost money. Say you decided to close your bet when it reached You work out how much you lost in the same way, multiplying the point difference and the stake: —. The point difference that you have lost is That works out to With a major index such as the Australia , your spread betting provider may give you further choices, such as future based bets which you can hold without charge and do not have to be closed for a couple of months.
IG Index spread betting offers the Australia future at — Assuming that the index does not go too far against you, you can hang on to this position and give it time to maximize your gain. The amount you have won is again worked out from multiplying the point difference and the stake. Even if it later came down, if it went up sufficiently that you were in danger of losing too much money you would be sensible to close your bet and cut your losses.
Say it went up to — , and you closed your bet at This entry is filed under indices. You can follow any responses to this entry through the RSS 2. You can leave a response , or trackback from your own site. Name required. Mail will not be published required. Please contact us if you wish to reproduce any of it. Trade the markets with Bux Markets!
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