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Going Short (or profiting from falling prices)

The Bid Price

If you are new to spread betting it is essential that you fully understand what short selling is and how you can use it to your advantage. Please go here for an introductory guide to short selling.

In order to go short the market or bet on a downward move in prices you will be initiating the trade on the spread bet brokers bid price. If the Spread Betting company is quoting a price on the FTSE 100 at 4250-4254, you would be selling at 4250. For this example assume that you sold short £1 at 4250.

The Offer Price

Your bearish spread bet on the FTSE 100 was correct and the market moved lower with the Spread Betting broker now quoting 4180-4184. In order to take your profit you would have to buy at the offer price of 4184, therefore earning a profit of 4250 - 4184 = 66 points x £1 = £66.

But if you were wrong and the market rallied higher the spread bet broker may well quote 4289-4293, and so again in order to cover the bet and take the loss you would be buying at the offer price of 4293, thus losing 43 points multiplied by your stake of £1, or £43.

Is Spread Betting As Simple As A Two-Way Price?

Yes, because with Spread Betting whatever products you're trading and in whatever market it all works the same. You will be quoted a two way price with which you can either go long or short alongside a fixed amount per point.

You might for example understand nothing about the German Bund market, but spread betting on this works exactly the same as on the FTSE 100 index.

Make sure you understand the basics including short selling (our guide is available here), because then you will have laid good foundations with which to gain more experience over time.

Don't play around with spread bets until you've set your foundations - SOLID.

What can be bought/sold on either the Bid or Offer price

	LONG TRADE	SHORT TRADE
BID PRICE	Sell either to take a profit or loss	Sell to establish a short position
OFFER PRICE	Buy to establish a long position	Buy either to take a profit or loss