Spread Betting Guide to Trading on Indices for Beginners

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April 24, 2012
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Spread Betting Guide to Trading on Indices for Beginners

LONDON, April 24, 2012/PRNewswire/ --

    Spread betting with City Index [http://www.cityindex.co.uk ] enables investors the
flexibility of going short and selling markets, enabling them to potentially profit from
markets as the fall, as well as going long and potentially profit from rising markets as
well. In the following easy-to-follow guide, beginners can learn how they can go short and
sell on a trade with a spread betting account.

                                Spread Betting with City Index

    Investors choosing to spread bet with City Index can benefit from:

   
    - No Capital Gains Tax or Stamp Duty*
    - Ability to go long and short on a market
    - Access to over 12,000 financial markets
    - Easy access through its high leverage feature
    - Leveraged trading

    Tax-Free Trading

    At present in the UK, investors can benefit from paying no Capital Gains Tax (CGT) or
Stamp Duty on profits made through their spread betting account. However, this is subject
to change and investors should seek independent advice if necessary.

    Spread Bet Markets

    With access to over 12,000 spread betting markets
[http://www.cityindex.co.uk/spread-betting/spread-bet-markets.aspx ], investors can place
trades on the future price movements of shares, indices, currencies and many more - for
only a small percentage of the underlying market's price as an initial deposit.

    Leverage

    As mentioned above, the initial deposit for accessing these markets is only small;
with City Index, investors are required to pay typically between 1% and 10% of the
underlying market's total value, allowing easy access into the world of trading for many
new and part-time traders.

    Commission free trading

    There is no commission charged for each of your spread bets. However as the name
suggests, there is a widened spread, which is one of the chief costs of placing the spread
bet.

                                  Spread Betting on Indices

    Indices are the most widely traded markets in the world. Investors choosing to spread
bet on indices [http://www.cityindex.co.uk/spread-betting/spread-bet-markets.aspx ] with
City Index can benefit from some of the tightest spreads available.

    For example, the following markets are available to spread from just 1 point:

   
    - UK 100
    - Wall Street
    - France 40
    - Germany 30

    How to Spread Bet on Indices

    In the example below, we show you how to spread bet
[http://www.cityindex.co.uk/spread-betting/how-to-spread-bet.aspx ] on the Wall Street
Daily Funded Trade indices market with a City Index spread betting account.

    As an example, the Wall Street Daily Funded Trade (DFT) is available to trade at
12791/12792 (sell price/buy price).

    Following extensive analysis and utilising the range of spread betting education and
resources [http://www.cityindex.co.uk/spread-betting/education-and-resources.aspx ]
available to you as a City Index client; you expect the Wall Street Index to rally over
the coming days.

    Subsequently, you decide to go long and open a buy position of GBP10 per point at
12792.

    Over the coming days, the release of some positive US economic data causes the the
Wall Street Index to rally, resulting in City Index's latest price for the Wall Street DFT
to be 12808/12809 (sell price/buy price).

    At this point you decide to cash in your gains. You do this by selling GBP10 per point
at 12808 (the City Index sell price show above).

    Therefore, you net a tax-free profit* of GBP160. This is because you bought at 12792
and sold at 12808 with a stake size of GBP10 per-point. The market moved in your favour
16-points, which multiplied by your stake size of GBP10 per point, nets you a profit of
GBP160, i.e. (12808-12792) x GBP10 = GBP160.

    Alternatively, had the market moved against your buy position and the Wall Street
Index has in fact fallen 16-points to 10776; you would have incurred a loss of GBP160,
i.e. (12792-12776)xGBP10=GBP160.

                                     Spread Betting Risk

    As a leveraged product, the potential for profits and losses from an initial capital
outlay are significantly higher than in more conventional forms of trading when spread
betting on the financial markets.

    Financial spread betting
[http://www.cityindex.co.uk/spread-betting/start-spread-betting.aspx ] can result in losses
exceeding your initial deposit, spread bettors must fully understand the risks and analyse
their market fully, prior to placing a trade.

    *Spread betting is currently exempt from UK stamp duty and Capital Gains Tax. Tax laws
are subject to change and depend on individual circumstances. Please seek independent
advice if necessary.

    About City Index:

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

    As a group, we transact in excess of 1.5 million trades every month in over 50
countries. We provide access to a wide range of instruments including margined foreign
exchange, CFDs and, in the UK, financial spread betting [http://www.cityindex.co.uk ].

    We constantly look to improve the performance of our platforms and expand our range of
services. The result is our customers benefit from innovative trading tools with
transparent pricing, competitive spreads, and a high standard of customer support. Visit
http://www.cityindex.co.uk for details.

Source: City Index

Joshua Raymond, City Index, +44(0)20-7107-7002, joshua.raymond@cityindex.co.uk

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