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# can somebody explain spread betting

Found 26th May 2014
Can somebody explain Spread betting and what platform they use and what pips mean
ig.com/uk/…ing

Spread betting allows you to take a position on whether you think a market will rise or fall, without having to buy the underlying asset.

Importantly, spread betting is a leveraged product. This means you only have to put down a small deposit for a much larger market exposure.
Betting using leverage means there are significant benefits and risks: your investment capital can go further, but you can also lose more than your initial deposit.

Spread betting is flexible as it's possible to take short positions and deal on over 10,000 markets. However, it is important to understand the risks involved and have suitable risk management strategies in place.

With spread betting you are betting on the financial markets, not trading them directly. This means any potential profits are tax-free*.

How it works

With each market you are given a 'buy' and 'sell' price either side of the underlying market price – this is known as the spread. If you think the market will rise, you open your spread bet at the ‘buy’ price. If you think it will fall, you open at the ‘sell’ price.

The more the market moves in your favour, the greater your profit. The more the market moves against you, the greater your loss.

A Pip is a decimal point. Pips are measured to four decimal places. For … A Pip is a decimal point. Pips are measured to four decimal places. For example, the price £1.01 which reads One Pound and 1 Penny, could be written to four decimal places as follows: £1.0100 = £1.01. Therefore, if you added 5 Pips to this price, the figure would read as follows: £1.0105. Therefore, if the market price was to increase from: £1.0101 (One Pound, One Penny and 1 pip) to £1.0115 (One Pound, One Penny and 8 pips). The market price would have increased by 14 Pips. So when a trader says they made 50 Pips today, then you know they mean that the market price goes from: £1.0100 to £1.0150. Once you master the concept of Pips, you are well on your way to understanding the basic measurements used in the currency spread betting.

William Hill is worth a look, I suspect it is a simplified version of full-on spread betting but is a good introduction before you bet your house

financials.williamhill.com/
The short answer is that if you need to ask, then you should not even be considering it.

The market maker will set a range of values for the price of something at a given point in the future. You then go long or short ie bet that the price will go up or down.

Unlike most gambles/'investments' you have the potential to lose far more than you bet. This is because you bet an amount per point or pip. At the end of the bet if the market price is within the spread of the prices the broker quoted then you get nothing. If the price is outside this then you either win or lose the amount per point that you bet multiplied by the number of points the price is outside the range.

If the market moves against you by 100 pips and you bet £10/pip then you have lost £1000. The key thing is that it is possible to win or lose huge amounts of money. If you buy shares then the most you can lose is the cost of the shares. with spread bets you can lose far more than you put in.

The original purpose of spreads, as with most other financial derivatives, was to allow large firms to protect themselves against the market moving in a way that they didn't expect.

mas99

The short answer is that if you need to ask, then you should not even be … The short answer is that if you need to ask, then you should not even be considering it.

Seconded.
deleted409647
if you're into football go and talk to Dietmar Hamman. I'm sure he will put you off the idea...