How are Profits Calculated in Spread Betting?

Spread betting can make people large profits with only a small amount of capital wagered. That is because profits in spread betting are calculated by the point movement of the spread times the stake size. The more correct a trader is the more profits. Likewise, the more incorrect one is the greater capital lost.

In spread betting a bet is made on a spread of numbers. A trader may buy or sell the spread for a stake size of one’s choice. A trader places a spread betting buy bet on the spread 23-25 for a stake size of £2. The closing market price ends up being 35, a ten point difference, and is multiplied by the wager and the total profits are £20.

These spread betting profits could have been greater if the trader had staked £5 per point which would have resulted in £50. Another way the profits could have been greater was if the point movement had been more than 10 points. A 20 point movement would have resulted £40 in profits.

Calculating profits in spread betting is will give an approximate value if the bet is in the trader’s favour; however one can never predict the accuracy of the bet.

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