LONDON, June 17, 2011 /PRNewswire/ --
Innovative spread betting and CFD trading provider City Index (http://www.cityindex.co.uk/) offers some of the tightest Forex spreads on the market. Starting from a spread of just 1 point for EUR/USD and 2 points for GBP/USD, the company offers more than 30 rolling currency pairs - including some of the best value spreads in the industry.
Spread betting on the foreign exchange allows traders to effectively buy and sell currency pairs without ever actually owning them. You can hold contracts for anything from a few minutes to a few months or even years.
Forex trading example
Let's say the current City Index GBP/USD rolling bet spread is 15020/15023 (sell price/buy price).
Going Long on Currencies
You expect sterling to strengthen (sterling appreciates) against the US dollar and decide to buy (go long) £2 per point at 15023.
You were right: As you anticipated, sterling strengthens against the dollar, and when it reaches 15210 you decide to cash in your profits. The new rolling bet spread is 15210/15213 and you sell £2 per point at 15210.
Result: You bought at 15023 and sold at 15210, a rise of 187 points (pips) which at £2 per point nets you a tax-free profit* of £374 (15210 - 15023 x £2).
Alternative scenario: If however, sterling had weakened (sterling depreciates) against the US dollar to 14836, you would net a £374 loss (15023 - 14836 x £2).
Going Short on Currencies
You expect sterling to weaken (sterling depreciates) against the US dollar and decide to sell (go short) £2 per point at 15020.
You were right: As you anticipated, sterling weakens against the dollar, and when it reaches 14860 you decide to cash in your profits. The new rolling bet spread is 14857/14860 and you buy back £2 per point at 14860.
Result: You sold at 15020 and bought back at 14860, a fall of 160 points (pips), which at £2 per point nets you a tax-free profit of £320 (15020 - 14860 x £2).
Alternative scenario: If however, sterling had strengthened (sterling appreciates) against the US dollar to 15180, you would net a £320 loss (15180 - 15020 x £2).
City Index provides a range of free seminars, webinars and market commentaries for traders looking to start spread betting on the foreign exchange.
The company also offers daily options on a number of currency pairs, starting from just £1 per point on EUR/USD, GBP/USD and USD/JPY. Remember though that spread betting losses can exceed your initial deposit, so thorough market research is essential before you trade.
Learn more about Forex trading and spread betting on the foreign exchange at:
Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
*Spread betting and CFD trading are exempt from UK stamp duty. Spread betting is also exempt from UK Capital Gains Tax. However, 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 City Index trading platforms.
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, contracts for difference (CFDs) and, in the UK, financial spread betting.
We constantly look to improve the performance of our platforms and expand the range of services we provide. The result is that 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 more information on a City Index spread betting account.
SOURCE City Index