SPREAD BETTING Idea of Spread Betting

Spread betting is the investment in foreign exchange (so called spread). Because of that, this is the safest way to invest that exists in the entire world for this moment. Investing in foreign exchange(on the spreads) means that at the same time we buy and sell the contract of the same value but with different maturity dates.

        There are many of the values ​​in which we invest by Spread betting. By this method we can invest in shares, bonds, indices, commodities, currencies. It is worth to know when and in which instruments due to the liquidity that appears in the markets during the given period.

I will describe this issue in more detailed way in another post because it is quite wide but also very important.

         So lets get back to the idea of playing with the discussed method. You should know that in fact contracts like ( for example ) the instrument DAX can buyed with two different prices. The first price is the price at the outright more liquid on which there are done more orders and the second is the price at which the contract that will be liquid when the previous contract will expire, that is after three months. Both rates are very similar, following each other in parallel and are changing in parallel.
             Using the language of professiona l- every instrument consists of a series of contracts. Series shall expire every three months. The largest liquidity, ie the majority of orders is done on the currently ongoing series. The prices for the next series of contracts follow the most current, however, appear between them smaller or larger differences.
               During the session, the difference between these two prices slightly changes - and we can earn on that.

For example:

In this example, exchange differences changed by 5 points(price of spread grown by 5 points). Thus, if we were playing for increase exchange rate we earn. If we played the decrease of this difference, we are at a loss.

As you can see the idea is very simple and to understand it better I will rephrase it again .

Placing an order when we buy and sell contract first two ( one order make two orders ). We play on the growth of exchange rate difference .

buy 10 differences , resale differences 1 We are in the black five points.

Placing an order short sell the contract first and buy second. We play on the decline (decrease) exchange rate difference .

We sell 15 buys differences differences 10 we are in the black five points.

It should be noted that to invest in this way are, of course, software. There outrightów access to charts and spreads. It is of course also possible to buy or sell Spread one click. The procurement of this topic in subsequent posts .

If something is not clear , please ask :)