Going Long or Short

You decide how much you want to 'bet' per point the market moves and if your prediction's correct you'll receive this amount multiplied by the number of points the market's moved. However, if your prediction turns out to be wrong, you'll lose this amount multiplied by the number of points the market has moved.

Spread Trading - 'Going long'

If you go long (buy) then if the price increases, you make a profit but if the price decreases, you'll make a loss.

For example

XYZ Plc. is currently trading at 500p/502p (sell price/buy price) per share and you think that the price will rise over the next month so you go long and buy. You buy at 502p with a stake size of £10 per point.

The price rises:

XYZ Plc. is now trading at 510p/512p and you decide to close your trade. You bought at 502p and sold at 510p giving you an increase of 8 points and a profit of £80 (8 points x £10 per point).

The price falls:

The price of XYZ Plc. goes down to 470p/472p. If you close your trade at this price, you will have lost 32 points or £320 (32 points x £10).

Spread Trading - 'Going short'

Spread Trading allows you to trade on both rising and falling markets so if you think a price will fall, then you go short (sell). This means that if the price goes down, you'll make a profit and if the price goes up, a loss.

For example:

The price of 789 Plc. is currently 48p/50p and you think that over the next three months, the price will fall. You go short at 48p with a stake size of £5 per point.

The price rises:

The value of 789 Plc. shares goes up to 55p/57p and you close your trade. The price has gone up by 9 points and so you'd lose £45 (9 points x £5)

The price falls:

The price of 789 Plc. shares drops to 40p/41p. If you close your trade, you’ll have made £35 (7 points x £5)

If you’re thinking of applying for an IWeb Spread Trading Account, please make sure you’ve read, and taken the necessary steps to understand, the Important Information and Key Risks of Spread Trading.

What is Spread Trading?              Understanding the risks                  How to Spread Trade 

Important Information                         General Terms                         Key Service Features 

Margins and Financing                  Going long or short                      Apply for an account 

IWeb Spread Trading is provided by City Index Ltd and therefore your contractual relationship is with City Index.
City Index Limited is authorised and regulated by the Financial Services Authority (FSA Register Number 113942).