Using shares as an example, the basics steps are:

Step 1:

You find a bid-offer quote from a spread betting company.

Step 2:

If you think the shares are going to rise above the offer price, you buy.

If you think the shares are going to fall below the bid price, you sell.

Step 3:

You enter the total funds you wish to risk and place an appropriate stop-loss.

That’s it.

What you need to know:

The higher or ‘offer’ price is for buyers and the lower or ‘bid’ price is for sellers. If you think the price of BT shares will rise above the offer price of 188p, you buy. Also known as an ‘up bet’ or ‘going long’.

Conversely, if you think the price of BT shares will fall below the bid price of 186p, you sell. Also known as a ‘down bet’ or ‘going short’.

You specify how much in pounds (£), dollars ($) or euros (€) you wish to bet (called the ‘stake’) per point movement or per ‘tic’ in BT. In this case, one point or one tic is equivalent to a penny movement in BT shares.

As you are trading on a ‘per point’ movement of the shares either way, there is no fixed amount that you can win or lose. Your profits or losses are equivalent to a multiple of your stake. For example, if BT shares rise 5 points from 188p to 193p, you win £50 on a £10 per point bet (£10 x 5 points = £50).

As you are betting on the price movement only, you do not own the underlying share at any point.

Spread betting is provided by Admiral Markets and London Capital Group.

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