Spread betting on forex

To account for the spread in forex trading, you simply need to include the difference between your chosen market’s buy and sell prices when calculating a trade’s outcome. In order for a trade to become profitable, you’ll need your FX pair to move beyond the price of the spread. 

For instance, if EUR/USD is trading at 1.1348, it might have a sell price of 1.1347 and a buy price of 1.1349 – a spread of 2 points. To go long, you’d trade at the buy price of 1.1349, which means you’d need the sell price to move above 1.1349 before you can execute at profit. 

If you close your trade when Eurodollar rises to 1.1402, with a spread of 1.1401/1.1402, you would sell at 1.1401 so your profit would be 52 points multiplied by your stake size. 

Learn more about how to trade forex. 

Spread betting is a popular way to day trade forex. Like traditional forex trading, spread betting gives you access to leverage and enables you to go short on FX pairs as well as long – but it comes with some additional powerful benefits. 

Firstly, all profits from spread betting are entirely tax free in the UK.* You won’t have to pay any capital gains tax or income tax. Plus, spread bets are always in your base currency, so there’s no currency conversion required to trade global currencies. 

Learn more about the benefits of spread betting. 

No, forex trading isn’t classed as spread betting. Forex trading is the buying and selling of currency pairs, spread betting is a derivative product that enables you to speculate on a range of different asset classes. 

You can use spread betting to go long and short on forex pairs, but it works a little bit differently to spot FX trading. Instead of selling the quote currency to buy the base currency, you’re betting on the future price direction of the pair. 

Say, for example, that you bet £5 per point that EUR/USD is going to rise from its current price of 1.1348. You’ll make £5 for every point that EUR/USD goes up and lose £5 for every point it falls. 

You might notice a couple of differences to forex trading here. Chiefly, your profit or loss is calculated in GBP, not USD. That’s because you’re betting a set number of pounds per point, so you don’t have to worry about currency conversion.