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Here we have a couple of financial spread betting example trades explained step by step to help in understanding - How does spread betting work?  The first spread bet example trade is going long on Bp and the second example is the exact opposite trade, going short on Bp.

In example 1, lets say that you think Bp shares are about to have good run up and you want to buy them or go long via yourspread betting account. (remember, you do not actually purchase or own the stock in spread betting

Bp shares are quoted at  626p  (628p to buy and 624p to sell)

You Buy Bp for £10 per point at 628p

You were correct:  Bp goes up 50 points to 676p and is now quoted at 674 - 678

• You close the position (sell) at 674p...your profit is (674-628) = 46 points
• 46 points x £10 = £460 profit

You were Wrong:  Bp goes down 50 points to 576p and is now quoted at 574 - 578

• You close the position (sell) at 574p...your loss is (574-628) =54 points
• 54 points x £10 = £540 loss

Selling 1,000 shares of Bp

In this second example spread bet, lets say that you think Bp shares are about to have good run down and you want to sell them or go short via your spread betting account.

Bp shares are quoted at  626p  (628p to buy and 624p to sell)

You Sell Bp for £10 per point at 624p

You were correct: Bp goes down 50 points to 576p and is now quoted at 574 - 578

• You close the position (buy) at 578p...your profit is (624-578) = 46 points
• 46 points x £10 = £460 profit

You were Wrong: Bp goes up 50 points to 676p and is now quoted at 674 - 678

• You close the position (buy) at 678p...your loss is (624-678) =54 points
• 54 points x £10 = £540 loss

Now lets see a spread betting comparison. Compare our spread betting example of a spread bet going long on 1000  Bp shares to a stock purchase through a traditional Stock broker trade.

Risk Warning - Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.