Spread Betting Indices | Betting on Stock Market Indices

If you already make money from spread betting you might want to take a look at the indices, one the main advantages of spread betting an index being that it will never go bust or be taken over. Spread betting on indices allows you to trade with much smaller stakes than would be possible if taking the direct route of trading the futures markets, also since all spreadbets are denominated in sterling you do not have any currency fluctuations issues to worry about.

There is no direct commission on trading index spread bets with providers simply adding a little extra on the market spread. For instance popular markets like the FTSE 100 or the Dow Jones 30 might only cost you point or two, although the other markets can be more expensive. Index markets are priced using the respective futures contracts and are generally very liquid, particularly while the underlying stock exchanges are trading. You can either bet on a futures based index, in exactly the same way and over the same periods as a share, or you can place a daily bet. This type of bet dies at the close of business in the market to which it refers. The daily FTSE 100 will open at 0830 hours in London and close at 1630 hours. The daily Dow Jones opens and closes with Wall Street.

The amount by which an index moves in a day is generally not great, although in recent times we have experienced a few trading days when falls of 200 points have been registered – however it is more usual for big movements to follow after a catastrophe or some extraordinary bad news such as a major bank failure, or substantial and very expensive disaster. Since the spread betting company will quote spreads of around 2 to 8 points on indices, you need to see a minimum movement in the ‘price’ of 2 to 8 points (respectively, depending on the index market) before you break even.

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