Innovative spread betting and CFD trading provider City Index offers some of the tightest Forex spreads on the market.
Starting from a spread of just 1 point for EUR/USD and 2 points for GBP/USD, the company offers more than 30 rolling currency pairs - including some of the best value spreads in the industry.
Forex spread betting allows traders to effectively buy and sell currency pairs without ever actually owning them. You can hold contracts for anything from a few minutes to a few months or even years.
City Index Forex Spread Betting: Going Long
Let's say the current City Index GBP/USD rolling bet spread is $1.5020-$1.5023 (sell price-buy price).
You expect sterling to strengthen (sterling appreciates) against the US dollar and decide to buy (go long) £2 per point at $1.5023.
You were right: As you anticipated, sterling strengthens against the dollar, and when it reaches $1.5210 you decide to cash in your profits. The new rolling bet spread is $1.5210-$1.5213 and you sell £2 per point at $1.5210.
Result: You bought at $1.5023 and sold at $1.5210, a rise of 187 points which at £2 per point nets you a tax-free profit* of £374 ($1.5210 - $1.5023 x £2).
Alternative scenario: If however, sterling had weakened (sterling depreciates) against the US dollar to $1.4836, you would net a £374 loss ($1.5023 - $1.4836 x £2).
City Index Forex Spread Betting: Going Short
Using the same initial GBP/USD price as above, you expect sterling to weaken (sterling depreciates) against the US dollar and decide to sell (go short) £2 per point at $1.5020.
You were right: As you anticipated, sterling weakens against the dollar, and when it reaches $1.4860 you decide to cash in your profits. The new rolling bet spread is $1.4857-$1.4860 and you buy back £2 per point at $1.4860.
Result: You sold at $1.5020 and bought back at $1.4860, a fall of 160 points, which at £2 per point nets you a tax-free profit of £320 ($1.5020 - $1.4860 x £2).
Alternative scenario: If however, sterling had strengthened (sterling appreciates) against the US dollar to $1.5180, you would net a £320 loss ($1.5180 - $1.5020 x £2).
Spread betting and CFD trading carry a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary.
Content approved / provided by City Index Limited which is a company registered in England and Wales, number: 1761813. Authorised and Regulated by the Financial Services Authority. FSA Register Number: 113942.
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'City Index Forex Spread Betting', Review by D. Jones, last update: 14-Nov-11
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Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it may not be suitable for all investors. Ensure you only
speculate with money that you can afford to lose and that you fully
understand the risks involved and seek independent financial advice where necessary.
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solicitation of any offer to buy. The website content does not constitute investment
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* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
