Guide to Forex Spread Betting

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Forex Spread Betting

Forex Spread Betting


A guide to forex spread betting:

Where Can I Spread Bet on Forex Markets?

FinancialSpreads offer spread betting and CFD trading on over a thousand markets including the forex markets below.

For further guides to individual foreign exchange markets see:

'Major' Forex Markets

'Minor' Forex Markets

'Exotic' Forex Markets

Where Can I Access Live Forex Prices?

FinancialSpreads offers clients live prices on more than 1,000 spread betting and CFD markets including the forex markets listed above and numerous shares, stock market indices and commodities.

Tax-Free* Forex Spread Betting

Financial spread betting, including forex spread betting, is currently tax-free in the UK. Note though, tax treatment depends on the individual circumstances of each client and may change in the future.

Where Can I Practice Spread Betting on Forex Markets?

FinancialSpreads offers a free Demo Account so you can practice spread betting and CFD trading as well as test the trading orders, review the live charts and try new ideas on markets such as EUR/USD, GBP/USD, EUR/GBP, USD/JPY etc.

The Demo Account is not restricted to the above; investors are also able to get trading experience across a large range of stock market indices and commodity markets.

Where Can I Get Live Forex Charts?

Clients can access live candlestick charts for numerous forex CFD and spread betting markets.

The charts come with an array of features that include:
  • Many different time intervals e.g. 30 minutes, 2 hours, 1 month and so on
  • Drawing tools and features e.g. Fibonacci retracements and trendlines
  • Indicators e.g. MACD, RSI, Williams %R and so on

Example FX spread betting chart:

Forex Spread Betting Charts



How to Spread Bet on Forex

The following example looks at the most popular forex market, EUR/USD, for more worked trading examples also see: Looking at EUR/USD, let's assume that you login into your account and the platform is showing a price of:

Bid Ask
  EUR/USD Rolling Spot 1.13972 1.13979


This is an example of how it works:

Spread Betting Market:EUR/USD Rolling Spot
The Spread:$1.13972 - $1.13979
How This Works:Now you can spread bet on the EUR/USD Rolling Spot market moving:

  Spread Betting Above $1.13979, or
  Spread Betting Below $1.13972

This is a 'Rolling' spread bet and so there is no settlement date. If you haven't closed your trade and the session ends then your position will roll over to the next trading day.

Note that if the trade is rolled over then you will normally either pay or receive interest for overnight financing based on whether you are speculating on the market to decrease or increase. To learn more also see Rolling Spread Bets.
Trading Units:Spread betting trades on the EUR/USD market are made in £x per point.

Where a point is $0.00010 of the forex pair's price movement.

E.g. if EUR/USD changes by $0.00400 then you would win/lose 40 multiples of your stake.
Stake Size per Unit:You decide how much you want to stake per point, e.g. £1 per point, £5 per point, £15 per point etc.
Short Staking Exercise:For example, if you chose a stake of £4 per point and EUR/USD moves $0.00210 (21 points), you would win / lose £4 per point x 21 points = £84.


Worked Example - Spread Betting on the Currency Market to Rise

Going Long of EUR/USD

You Now Decide Whether to Buy or Sell: EUR/USD to move:

  Spread Betting Above $1.13979? or
  Spread Betting Below $1.13972?

Letís Assume You Buy:   Spread Betting Above $1.13979
You Choose Your Stake, Let's Assume You Select: £2 per point
What Happens Next?
  • You will make a gain of £2 for each point ($0.00010) EUR/USD rises higher than $1.13979
  • You will lose £2 for every point ($0.00010) EUR/USD pushes below $1.13979
If You Are Spread Betting on a Market to Increase Your P/L = (Closing Price - Initial Price) x stake
 
Scenario 1
EUR/USD climbs and the spread trading market changes to $1.14680 - $1.14687. I.e.  
1.14680
 
1.14687
Take Your Profit? You can decide to leave your spread bet open or close it, i.e. close your trade for a profit. In this example you choose to close your position by selling at $1.14680.
Your P/L = (Closing Price - Initial Price) x stake
($1.14680 - $1.13979) x £2 per point (£2 per $0.00010)
$0.00701 x £2 per point
70.1 points x £2 per point
Your P/L = £140.20 profit
 
Scenario 2
EUR/USD goes lower and the market is moved to $1.13352 - $1.13359:  
1.13352
 
1.13359
Close and Restrict Your Loss? At this point, you may choose to let your spread bet run or close it and limit your losses. In this case you opt to close your trade and sell at $1.13352.
Your P/L = (Closing Price - Initial Price) x stake
($1.13352 - $1.13979) x £2 per point (£2 per $0.00010)
-$0.00627 x £2 per point
-62.7 points x £2 per point
Your P/L = -£125.40 loss


Worked Example - Spread Betting on the Currency Market to Fall

Shorting EUR/USD

You Now Decide Whether to Go Long or Short: EUR/USD to push:

  Spread Betting Above $1.13979? or
  Spread Betting Below $1.13972?

Let's Say You Want to Sell:   Spread Betting Below $1.13972
You Select Your Stake Size, Selecting: £3 per point
So What Happens Now?
  • You will lose £3 for every point ($0.00010) EUR/USD goes higher than $1.13972
  • You will make a gain of £3 for every point ($0.00010) EUR/USD falls lower than $1.13972
When You Sell a Spread Bet Your P/L = (Initial Price - Closing Price) x stake
 
Scenario 3
EUR/USD moves lower and the spread betting market becomes $1.13334 - $1.13341, i.e. the market moves to:  
1.13334
 
1.13341
Close for a Profit? At this point, you could opt to keep your bet open or close it and take a profit. In this example you decide to close your position by buying the market at $1.13341.
Your P/L = (Initial Price - Closing Price) x stake
($1.13972 - $1.13341) x £3 per point (£3 per $0.00010)
$0.00631 x £3 per point
63.1 points x £3 per point
Your P/L = £189.30 profit
 
Scenario 4
EUR/USD pushes higher and the financial spread betting market is revised and moved to $1.14529 - $1.14536, i.e. on Financial Spreads you would see:  
1.14529
 
1.14536
Time to Restrict Your Loss?At this point, you may opt to leave your bet open or close it, i.e. close your trade to limit your losses. In this case you decide to close your bet and buy at $1.14536.
Your P/L = (Initial Price - Closing Price) x stake
($1.13972 - $1.14536) x £3 per point (£3 per $0.00010)
-$0.00564 x £3 per point
-56.4 points x £3 per point
Your P/L = -£169.20 loss
  • EUR/USD notes: spread trading prices as of 13 February 2015
  • You are also able to trade on EUR/USD in euros per point and US dollars per point

Forex Trading Information and Data

Further news and information on the foreign exchange markets: Financial Spreads is not responsible for the content of external / third party websites.


Summary Forex Non-Commercial and Open Interest COT Report - 17 May 2016


Forex Net Non-Commercial Commitments (Futures Only) Open
Interest
Change in Open Interest
Long:Short RatioRatio as of 17 May 2016 17 May 2016 26 Apr 2016 Weekly Change
Euro 1:1.2 -22,587 -21,872 -715 349,559 4,581
Sterling 1:2 -38,422 -34,935 -3,487 239,158 639
Japanese Yen 3.2:1 58,919 59,047 -128 158,909 -6,640
Swiss Franc 1.2:1 4,147 6,917 -2,770 44,754 2,053
Australian Dollar 1.5:1 24,893 38,158 -13,265 114,119 -12,649
Canadian Dollar 2.6:1 22,706 25,874 -3,168 124,370 -395
New Zealand Dollar 1.3:1 6,688 9,352 -2,664 43,986 -1,433
US Dollar Index 1.4:1 10,446 12,117 -1,671 65,412 -2,429

For more details about the above report, please see our Commitments of Traders (COT) Guide.



Spread betting and CFD trading carry a high level of risk to your capital and you can lose more than your initial deposit so you should ensure spread betting and CFD trading meet your investment objectives and if necessary seek independent advice.

The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.



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Spread betting, CFDs and margined forex trading are leveraged products which carry a high level of risk to your capital. You can lose more than your initial deposit so you should ensure spread betting, CFDs and margined forex meet your investment objectives and, if necessary, seek independent advice. Click here to see the full risk warning notice.

* Tax treatment depends on the individual circumstances of each client and may change in the future.

The information and comments provided herein should not be considered as an offer or solicitation to invest. Under no circumstances should anything herein to be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.

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