How to Spread Bet Stock Market Indices
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How to Spread Bet on Indices - an introduction to stock market betting. If you are looking for FTSE, Dow Jones, Wall Street or another major market like the NASDAQ and Nikkei, you're on the right website.
An Index is a statistical indicator that represents the total value of the stocks that constitute it eg the FTSE and Dow Jones are both indices. It often services as a barometer for a given market or industry and acts as a benchmark from which financial or economic performance is measured.
Q) Where can I Spread Bet on Indices?
Q) Where can I Trade for Free on Indices?
Q) How to Spread Bet on Indices?
Q) Where can I find Free Live Prices on Indices?
Q) Where can I find Free Indices Charts?
Q) Where can I find free Indices Trading News?
Q) Where can I find Narrow Indices Spreads?
Indices Narrow Spreads Comparison
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| FTSE 100 Daily - Spread Size |
1 |
3 |
1 |
2 |
2 |
1 |
2 |
| FTSE 100 Daily - Min Stake |
£1 |
£4 |
£1 |
£2 |
£1 |
£1 |
£1 |
| FTSE 100 Future - Spread Size |
4 |
4 |
4 |
6 |
1 |
4 |
3 |
| FTSE 100 Future - Min Stake |
£1 |
£4 |
£1 |
£2 |
£1 |
£1 |
£1 |
| Wall St Daily - Spread Size |
4 |
6 |
4 |
4 |
5 |
4 |
4 |
| Wall St Daily - Min Stake |
£1 |
£2 |
£1 |
£1 |
£1 |
£1 |
£1 |
| Nasdaq 100 Daily - Spread Size |
3 |
4 |
3 |
4 |
2 |
3 |
4 |
| Nasdaq 100 Daily - Min Stake |
£1 |
£5 |
£1 |
£4 |
£1 |
£1 |
£1 |
Comparison Notes
Indices Examples:
- FTSE 100: The index that highlights the performance of the UK's top 100 companies, as ranked by their market capitalisation. Sometimes referred to as UK100
- FTSE 250 or FTSE MID 250: The index of the next 250 companies, after the top 100
- FTSE 350: The index of the top 350 UK companies by market capitalisation. It is a combination of the FTSE 100 and FTSE 250 stocks
- Wall Street: An index of the top 30 US traded stocks
- S&P 500 Spread Betting: Defines the broader US equity market, tracking the performance of the top 500 US companies
- Nasdaq 100: National Association of Securities Dealers Automated Quotation System. An index that reflects the performance of high tech stocks in the US
- Nikkei 225: the price-weighted average of 225 stocks of the first section of the Tokyo Stock Exchange
An index will move in reaction to a variety of economic and political factors. Financial spread betting offers an interesting form of speculation on this market.
How to Spread Bet on The FTSE: Buying Rolling FTSE Example 1
On a given day you think the FTSE will rise and want to trade on your opinion. Therefore you could trade on a 'Daily FTSE market'. The market is based on where the FTSE closes on a daily basis.
ie you're quoted 6206 - 6210 at 8:45am and based on your opinion you decide to BUY (go high) at 6210. Expecting the FTSE to rise on the day you nominate a stake of £10 per point.
On that day the market does indeed rise and closes higher at 6238.Your profit is calculated by calculating the difference between the closing level (6238) and the opening price (6210) and multiplying that by your stake.
Day Trading Profit = (6238 - 6210) x £10 per point stake
= 28 points x £10 per point = £280 profit
If the FTSE had fallen and closed at 6195, you would have lost:
Day Trading Loss = (6195 - 6210) x £10 per point stake
= -15 points x £10 per point = £150 loss
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How to Spread Bet on the FTSE: Buying Daily FTSE example 2
Let's looks at a different example.
Let's say a spreadbetting firm is offering a Daily FTSE price of 6202 - 6206. That means you can 'buy' at 6206 or 'sell' at 6202
- You think the FTSE is going to rise, so you 'buy'.
- You decide to risk £5 per point
- The market rises in the afternoon. You decide to let your bet run to expiry
- The FTSE continues to rise towards the end of the day and your bet is closed at the official FTSE closing price of 6239
- The Settlement Price or Closing price = 6239
- Opening price = 6206
- Profit / Loss = (Closing price - Opening price) x stake
- (6239 - 6206) x £5 per point
- 33 point profit x £5 per point
- Profit = £165
What if you were wrong? What if the market didn't exceed your Opening price of 6206? Let's say it closes at 6196. The example works the same
- You think the FTSE is going to rise, so you 'buy'.
- You decide to risk £5 per point
- You decide to let your bet run to expiry
- The FTSE moves up and then down. Your bet is closed at the official FTSE closing price of 6196
- The Settlement Price or Closing price = 6196
- Opening price = 6206
- Profit / Loss = (Closing price - Opening price) x stake
- (6196 - 6206) x £5 per point
- - 10 point loss x £5 per point
- Loss = £50
How to Spread Bet on the FTSE: Selling Daily FTSE example 3 - Closing a bet
Let's say a spreadbetting firm is offering a Daily FTSE price of 6202 - 6206. Again you can 'buy' at 6206 or 'sell' at 6202.
- You think the FTSE is going to go down, so you 'Sell'.
- You decide to risk £10 per point
- The market rises in the afternoon. You decide to cut your losses by closing your bet at the latest current Daily FTSE price
- The new quote is 6210 - 6212
- To close a 'sell' bet you simply 'buy' at the top end of the spread for the same stake
- You buy £10/point at 6212
- Closing price = 6212
- Profit / Loss = (Closing price - Opening price) x stake
- Opening price = 6206
- Profit / Loss = (6212 - 6206) x £10 per point
- 6 point Loss x £10 per point
- Loss = £60
How to Spread Bet on Indices: Selling Wall Street Future Example
A new example, Wall Street has been gaining steadily but you feel the current level of 12215 is a medium term high. Therefore you could have a look at Wall Street Mar (March) and see the quote is 12331 - 12345.
Therefore you decide to SELL (go short) at 12331 for a stake of £5 per point.
You have Sold but the even if the price does increase you will still make a profit as long as it doesn't go above 12331 from the current level of 12215.
Let's say you're not quite right and the market continues to go up but only a fraction and in March it settles at 12290.
Your profit is calculated by calculating the difference between the closing level (12290) and the opening price (12331) and multiplying that by your stake.
Profit on day = (12331 - 12290) x £5 per point stake
= 41 points x £5 per point = £205 profit
However had Wall Street continued to increase at a greater rate and closed at 12360, you would have lost.
Loss = (12331 - 12360) x £5 per point stake
= -29 points x £5 per point = £145 loss
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Tight Spreads, No Commissions, No Fees. Trade
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Buying Wall Street
Further Buying Wall Street example.
Index Spread Betting Markets
Each company will have their own specific online markets however a number of the companies will offer most, if not all, of the following:
- American Shares S&P 500, US NASDAQ 100, Dow Jones Industrial Average 30 (Wall Street), Russ 2K
- Australian S&P ASX 100
- Chinese Index Hang Seng Future
- Dutch AEX
- European Euro STOXX 50
- French CAC 40
- FTSE 100
- FTSE 250
- FTSE ex350
- German Dax 30
- Hong Kong Hang Seng
- Indian Index S&P CNX Nifty
- Italian Index S&P Mib
- Japanese Nikkei 225
- Polish Stock Index
- Spanish IBEX
- Swiss Index SMI
The Best Spread Betting Companies?
If you're looking for places to spread bet - have a look at the following comparison click here
'How to Spread Bet Stock Market Indices' by DB, updated 26-Nov-07
For related pages also see:
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