In spread betting, the spread is the difference between the buy price and sell price quoted for an instrument. The buy price quoted will always be higher than the sell price quoted, and the underlying market price will generally be in the middle of the two prices.
When you place a trade, you will either buy or sell the particular product you're trading, depending on whether you believe the underlying market price will rise or fall.
The spread is one of the key costs involved in spread betting the tighter the spread, the better value you're getting as a trader. We offer consistently competitive spreads, with our spreads starting from just 0.7 points for EUR/USD and USD/JPY, and from 1 point for the UK 100 and Germany 30 indices. See our range of markets page for more information about our spreads.
Once your trade is placed and the price has moved in your favour beyond the cost of the spread, it will be a profit-making trade. Likewise, while it remains between the spread range or outside of it against you, the trade will be a losing trade.
Our examples below show how to calculate the spread for an index (UK 100) and a forex pair (GBP/USD), when you're looking at the moving prices within the trading platform. You can view our spreads at a glance within our range of markets section.
The spread is the last large number within a price quote.
The spread on the UK 100 shown here is 1.0, calculated by subtracting 6446.7 (sell price) from 6447.7 (buy price).
The spread on the GBP/USD shown here is 0.9. If you subtract 1.65364 from 1.65373, that equals 0.00009, but as the spread is based on the last large number in the price quote, it equates to a spread of 0.9.
We offer competitive spreads on our wide range of markets as we know this helps to reduce the overall cost of trading.