Spread Betting as a Form of Short Selling

LONDON, August 31, 2011 /PRNewswire/ --

Regulators in Belgium, France, Italy and Spain recently banned short-selling in a group of financial institutions and banks. The ban, designed to stem the current turmoil in the financial markets, was initially implemented for 15 days, starting from August 12, 2011.

In the UK, short selling is often undertaken through financial spread betting, a trading style offered by providers including City Index (http://www.cityindex.co.uk/). Spread betting gives traders the opportunity to profit from a falling market as well as a rising one, making them better placed to react effectively to sudden market movements.

Spread betting example

For example, imagine the FTSE 100 is trading at 5000/5001. You believe the price is going to decrease, so you decide to place a short (sell) spread bet at £10 per point. Over the next week, the FTSE 100 price falls to 4950/4951, and you close your trade by selling your stake back at 4951. This represents a 49-point gain in your trade which, when multiplied by your £10 stake nets you a £490 tax-free profit*. Conversely, if the FTSE had risen by 49 points instead, you would be looking at a loss of the same amount.

Learn more about spread betting with a free City Index demo account or spread betting seminar. Visit http://www.cityindex.co.uk/learn-to-trade/ for details.

Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through City Index trading platforms.

As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, CFD trading and, in the UK, spread betting.

We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support. For more information, visit http://www.cityindex.co.uk/.

SOURCE City Index

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