Here is an Example of trading the FTSE. I will first show you how to calculate the your bet size and bet risk. Then in the second part I will show you What to look out for and show you various strategies applied to the FTSE.
FTSE 100 Spread Betting Example
Here is a example of the FTSE 100. In this example lets assume you have already decided that you will spread bet the FTSE 100 up.
As you can see from the graph above the FTSE is currently trading at the spread price of 5468/70 with the mid price at 5469. In the Spread the price at which you buy is the offer price 5470 and the price at which you will sell is the bid, as you are selling to the buyers.
In this Example you believe that the FTSE will reach it’s previous high of 5540 but if it goes below 5440 you are happy to close your bet and cut your risk, take a loss.
Entry Long (current offer price) 5470
Profit Target (FTSE 100 previous high)- 5540
Stop Loss (FTSE 100 previous low) – 5440
-Limit price is 70 points above the current price and stop loss is risking 30 points.
-You decide you would like to Risk No more that 150 pounds, just to test your belief.
Stake (Pounds per point) = 150 GBP the amount you risking divided (by the points risking) 30 = 5GBP
-Your stake is 5Pounds a point. What this means is that for every point that the FTSE moves up or down you will loose or make 5 Pounds
If instead it goes in your favour all the way to 5540 + 70 points * 5GBP = your profit will be 350 GBP.
Risk reward Ratio: Your risk reward ratio is a min of 1:2. You are risking 150 to gain 350.
What is good practice is also to know the full value of your bet, well the full risk. This is only if the FTSE shuts down overnight and your spread bet looses the full of the FTSE 100 value overnight:
The Nominal value of the trade is £5 * £5470 = £27 350
To further help you in your Spread betting example, you can read calculating your risk
or back to the spread betting example section.
