The Profit Kings Horse Racing

A good way to illustrate how the transaction works is through an example, as the concept is generally the same in all markets. Let us assume that there are strong indications that current value of FTSE 100 index of about 6230 is too high, and chances are that share prices will decline in the next month or so. Accordingly, The Profit Kings you can spread bet a quote which may give you a FTSE 100 price for the 3rd week of the following month of around 6165 to 6175.

Based on this existing spread, you have two options, either you bet that it will fall below this price range and sell the index or you bet that it goes higher than this and buy the index. Either of these options, you are making a bet by staking a sum of money, say £12 per point. If you expect it to fall, you will logically sell the index. Let us assume that on the stated period, the FTSE 100 actually closes at 6015 level, 150 below the Index spread. Based on this result, your total spread or profit will be £12 times 150 or £1,800. The good thing about this instrument is that you don't have to wait until the stated period to claim your profits, as you can close them anytime as soon as you earn profit.

However, there is a downside in spread betting. The prospect of windfall profits is balanced by an equal prospect of potential losses. Let us assume that you have bought points under the same condition as discussed in the preceding paragraph. Your losses would have been astronomical. This negative hit on your pocket will be equivalent to £12 times 160 or £1,920. You have to remember that when you make an erroneous call, you stand to lose big time. On the other hand, if you make the right call, the profit will likely be astronomical.

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It is because of the high risk involved in this kind of transactions that companies involved in spread betting are very strict when it comes to credit. In most cases, they only provide credit to individuals who are capable of absorbing substantial losses in the transaction. Thus, you will have to expect cash transactions from your bookmakers whenever your bets move into negative territory.