Example of a futures type currency trade

You are bullish towards the British Pound against the US dollar and are quoted a price of 16246-16256 for the March spread bet

• You buy £5 a point at the offer price of 16256 (some may refer to this price as 162.56)
• Initially your view is correct with the market rallying up to a mid price of 16350, but a bullish US economic figure is released so creating demand for US dollars
• The market quickly moves lower and you decide to take your loss with the spread bet broker quoting you 16200-16210
• By selling on the bid price of 16200 you realise a 56 point loss meaning a cash loss of £280

Trade Spot Currency or Futures?

This is up to you, but if it's a short term trade lasting a day or two then SPOT is normally the best choice. The Spot market is really just a daily spread bet that expires at the close of that day, although of course you can roll it over as many times as you like.

But should you feel that Sterling is likely to appreciate against the Dollar over the next few months, then trading a future should be your vehicle of choice.

Currency Trades in British Pounds

Say you generally spread bet in UK shares and want to trade the occasional view on the Dollar/Yen. Chances are you don't want a Dollar profit or loss in your account and certainly not any Yen. The Spread Betting companies are pretty accommodating and therefore in most situations offer all of their currency bets in Sterling. So to trade the Dollar/Yen cross you can simply trade it with an associated Pound per point, in effect all profits and losses are in Sterling.