Spread betting is a leveraged way to back your view on a market — an index, share, currency pair or commodity — without owning the underlying asset. You stake money per point of movement: the further the market moves your way, the more you make; the further it moves against you, the more you lose.
The bet
Unlike share dealing, you never own anything. You are simply taking a position on whether a price will rise or fall. Because it is structured as a bet, profits are currently free of UK Capital Gains Tax and stamp duty — see our tax guide for the details and caveats.
The spread
Providers quote two prices: a lower sell price and a higher buy price. The gap between them is the spread — the provider's charge. If the FTSE 100 is quoted at 10,650.0–10,651.0, the spread is one point: buy at 10,651.0 if you think it will rise ("go long"), sell at 10,650.0 if you think it will fall ("go short"). The tighter the spread, the less the market has to move before you're in profit.
A worked example
Suppose you buy the FTSE 100 at 10,651 for £2 per point.
- Your exposure is roughly 10,651 × £2 = £21,302 — far more than most beginners realise.
- Under FCA rules, index margin is 5%, so you must deposit about £1,065 to open the trade.
- If the index rises 100 points to 10,751 and you close: you make 100 × £2 = £200 profit.
- If it falls 100 points and you close: you lose £200 — about a fifth of your deposit, from a 0.9% market move.
That asymmetry between a small market move and a large account move is leverage. It works identically in both directions, which is why position sizing and stop-losses matter more than predictions.
Margin and losing more than your stake
The deposit (margin) is not the most you can lose. Losses are calculated on your full exposure, and in fast markets a position can move past your stop before it is filled. Guaranteed stops (offered by most providers for a wider spread or premium) cap the worst case; ordinary stops do not.
Closing a trade
You can close at any time during market hours. Daily-funded bets roll overnight with a small financing charge; quarterly bets build the cost into a wider spread. Most short-term traders use daily rolling bets.
Most retail accounts lose money — every FCA-regulated provider publishes its own current loss rate; read it before you deposit anywhere. Start with a demo account, and never stake money you cannot afford to lose.
The rule that outranks every guide: never bet more than you can afford to lose.
Risk management →