Apply online now

A Short Trade Example

Imagine this scenario about a fictional computer manufacturer called Qwerty Corp:

Should the market move against you

Had the price risen due to a rumour of a takeover bid increasing the share price by 18 points to 240.00 / 242.50 you may decide to close your position at a loss by buying back at 242.50. This is a difference of 20.5 points (222.00 - 242.50) x £1 which is a loss of £20.50 to you.

This example uses a stake of £1 per point but you can trade in any multiples of £1, for example £3 or £10. If you had traded with a stake of £5 in this example you would have made a gross profit of £237.50 or a loss of £112.50 (plus or minus a financing). Trading with larger sizes increases your risk so make sure you understand the risks involved. Remember that all profits made from spread betting are tax free. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

Spread Betting, is a leveraged product and carries a high degree of risk to your capital and it is possible to lose more than your initial investment. Only speculate with money you can afford to lose. These products may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary.

Digital Look Markets is a trading name of CMC Spreadbet Plc who are authorised and regulated by the Financial Services Authority 170627. Spread betting services are provided by CMC Spreadbet Plc trading as Digital Look Markets, to whom you have been introduced by Digital Look Ltd. All dealing, administration and settlement in relation to these services is undertaken by CMC Spreadbet Plc. You and CMC Spreadbet Plc not Digital Look Ltd will be counterparties to each transaction.

Top of Page