Spread Betting

1. Spread betting is free of capital gains tax and stamp duty. Income tax may apply based on individual circumstances. (We advise you to check with a regulated tax professional if you are unsure how spread betting will affect you). 2. Spread betting allows you to use leverage, by doing so you can get full exposure with a small initial deposit – known as the margin. For example, if you want to place a trade equivalent to £1000 of oil, oil has a margin rate of 10%, therefore you would only have to put down £100. It is important to note that your profit and loss are calculated using the full size of your position. This means if the price moves 10% up or down, your profit or loss will be £100. Using leverage can amplify your profits and your losses, this is why it is important not to risk more than you can afford to lose when trading. 3. Going Short & Long. When spread betting you can benefit from a market that is declining in price as well are those that are increasing. How this works: When shorting, you are borrowing an asset and selling it straight away, when you close the position if the price is down you are buying back at a lower price, therefore making a profit. If the price of the asset has risen when you close, you are buying back at a higher price, therefore resulting in a loss. 4. Trade a range of markets. When you spread bet you can trade a variety of markets from oil contracts to major FX pairs. 5. Trade without paying a commission. You do not pay a commission when trading via a spread bet. The cost of opening your position is covered in the spread ( the difference between the buy and sell price you will see on the platform). Also, with Flux Markets you’ll get competitively low spreads across our markets.

Spread betting is subject to market risk, markets can be volatile at times and have large unexpected price movements against you. This is why it is paramount that traders only risk what they can lose. A risk management strategy can help reduce the damage of these movements against you. Examples of risk management is by using stop losses, setting limit orders, using our online education portal, and by keeping on top of market movements and news.

In spread betting, “going long” and “going short” are terms used to describe different strategies for betting on the direction of a market. “Going long” means you are betting that the price of the underlying asset will rise. In this scenario:

• You buy at the current price, with the expectation that the price will increase.
• If the market moves in your favor (i.e., the price goes up), you make a profit.
• If the market moves against you (i.e., the price goes down), you incur a loss.

“Going short” means you are betting that the price of the underlying asset will fall. In this scenario:

• You sell at the current price, with the expectation that the price will decrease.
• If the market moves in your favor (i.e., the price goes down), you make a profit.
• If the market moves against you (i.e., the price goes up), you incur a loss.

In spread betting, you are betting on the price movement rather than buying or selling the actual asset. The amount of profit or loss is determined by how far the market moves in relation to the size of your stake. Example:

Going Long:

• Current price of an asset: 1000
• You bet £10 per point that the price will rise
• If the price rises to 1010, your profit is (1010 – 1000) * £10 = £100
• If the price falls to 990, your loss is (1000 – 990) * £10 = £100

Going Short:

• Current price of an asset: 1000
• You bet £10 per point that the price will fall
• If the price falls to 990, your profit is (1000 -990) * £10 = £100
• If the price rises to 1010, your loss is (1010 – 1000) * £10 = £100

In spread betting, leverage is a mechanism that allows traders to gain exposure to larger positions than their initial capital outlay. Essentially, it means you can control a large position with a relatively small amount of money. This can amplify both potential profits and potential losses.

How Leverage Works

• Initial Margin Requirement: When you open a leveraged position, you are required to deposit a percentage of the total value of the position, known as the initial margin.
• Leverage Ratio: This is expressed as a ratio (e.g., 10:1, 20:1), indicating how much the position is amplified. For instance, a leverage ratio of 10:1 means you can control a position worth ten times your initial margin.

Example: Leverage Ratio of 10:1

• You want to place a spread bet on oil priced at 8000 (equivalent to $80 per barrel in the underlying market).
• Without leverage, if you want to open a trade with £10,000 this would be the equivalent of £1.25 per point (10000/8000).
• With a leverage ratio of 10:1, you only need £1,000 as margin to open this same trade size (10% of the total position).

Example: Price Movement Impact

• If the price rises to 8200 (equivalent to $82.00 per barrel), this would equate to a 200-point movement. Your trade size would now be £10,250.
• Your profit would be £250 (£10,250 – £10,000).
• This profit represents a 25% return on your initial £1,000 margin, this is the same profit as opening a trade size of £10,000 without leverage but you tied up 10% of the funds during the time the trade was open.

Benefits of Leverage

• Increased Potential Returns: Leverage can significantly amplify your profits, allowing you to achieve higher returns from smaller price movements.
• Capital Efficiency: You can free up capital for other investments since you only need to commit a fraction of the total value of the position.

Risks of Leverage

• Amplified Losses: Just as leverage can amplify profits, it can also amplify losses. A small adverse price movement can result in significant losses.
• Margin Calls: If the market moves against your position, you may be required to deposit additional funds to maintain your position. This is known as a margin call.
• Volatility and Rapid Changes: Leverage can make your positions more sensitive to market volatility, increasing the risk of rapid changes in your account balance.

We offer Oil contracts and 10 major FX pairs. For a full list please log into the platform and check symbols.

In spread betting, you make profits and losses based on the movement of the market price relative to your bet. Here’s a detailed explanation of how profits and losses are calculated:

How Spread Betting Works

• Choosing a Market: You select a financial market to bet on, such as Brent.
• Deciding the Direction: Going Long: You bet that the market price will rise. Going Short: You bet that the market price will fall.
• Staking Amount: You decide how much money you want to bet per point movement in the market. For example, you might bet £10 per point.

Making Profits: Going Long (Buying)

• Opening Bet: You place a bet to go long at the current price, for example, 1000.
• Price Increases: If the market price rises to 1010, the difference is 10.
• Profit Calculation: Your profit is the difference multiplied by your stake. If your stake is £10 per point: Profit = (1010 – 1000) * £10 = £100.

Making Profits: Going Short (Selling)

• Opening Bet: You place a bet to go short at the current price, for example, 1000.
• Price Decreases: If the market price falls to 990, the difference is 10.
• Profit Calculation: Your profit is the difference multiplied by your stake. If your stake is £10 per point: Profit = (1000 – 990) * £10 = £100.

Incurring Losses: Going Long (Buying)

• Opening Bet: You place a bet to go long at the current price, for example, 1000.
• Price Decreases: If the market price falls to 990, the difference is 10.
• Loss Calculation: Your loss is the difference multiplied by your stake. If your stake is £10 per point: Loss = (1000 – 990) * £10 = £100.

Incurring Losses: Going Short (Selling)

• Opening Bet: You place a bet to go short at the current price, for example, 1000.
• Price Increases: If the market price rises to 1010, the difference is 10.
• Loss Calculation: Your loss is the difference multiplied by your stake. If your stake is £10 per point: Loss = (1010 – 1000) * £10 = £100.

No, there are only fees for placing trades (The Spread) and holding your positions past 10PM (Overnight fee) on FX contracts.

The platform we provide is MetaTrader 5 – there is no cost for downloading or using the platform. The two costs on the platform are when you place a trade (spread) and if you hold a trade past market close (overnight fee) on FX pairs.