Spread betting is a tax-free financial derivative. It enables traders to speculate on the price movement of a financial market, including FX, commodities and indices. Traders can speculate without owning the underlying asset. Spread betting is exclusive to UK traders, allowing them to predict whether the market price in question will rise or fall. The degree in which you are right or wrong will determine the trader’s profit or loss.

More information can be found on our Market Information Sheets.

Exclusive to the UK
Watch Now

Spread betting allows you to trade on margin, which means the trader only needs to risk a small amount of their capital as your initial deposit for each trade. Trading on margin is an important tool, allowing the trader to take on larger positions. Larger positions will magnify both the trader’s profits and losses, and so must be used with due care. Some traders use a ‘stop-loss’ tool, which limits orders in order to manage the risk.

*UK Tax laws are subject to change without notice, please seek independent financial advice.

Spread Betting Example

We will use the Euro versus the US Dollar, EURUSD, as an example of how to trade FX on a Spread Betting Account.

First determine the standard lot size for EURUSDSB. If you do not know what the standard lot size is you can look it up on our Market Information Sheets.

In FX a pip is a unit used to measure a movement in price.
It is the smallest price change that an exchange rate can make e.g. one pip of EURUSD is 0.0001.

The ‘spread’ in spread betting represents the difference between ask price and bid price. If the markets move the way you bet, your profit will rise.
Similarly if the markets move the opposite way you bet, you will incur losses.

With GKFX you can trade from as little as £0.10 per pip on our spread betting accounts. To trade £0.10 per pip enter £0.10 per pip as your lot size. This is 0.10 x
the standard lot size of £1 per pip, which is £0.10, or 10 pence per pip.

Alternatively, if the prices in the examples moved in the opposite directions, you would have lost the amounts stated. On spread betting account your profit will always be in GBP.

Market
Price
Standard lot size
Min. Trade size
Deal
Price
Market Movement if you close your position ( 1.0984 – 1.0986 olsun market)
Gross tax-free* Profit
Alternatively

EUR /USD
£1 per pip
10 pence per pip as 0.10 lot size
Sell £10 a point at 1.1000
Sell Price 1.1000 - Buy Price 1.0986 = 0.0014 £14 per point
£14 * 10 = £140
If the price moves in opposite direction that profit will be your gross loss