Spread betting on commodities

A spread is the difference between the buy (bid) and sell (offer) prices quoted for a market. If you can buy gold at 1841 and sell it at 1840, for example, then gold has a one-point spread.

When you spread bet or trade CFDs on commodities, then the spread will include the cost you pay to open and close your position – so you won’t have to pay any commission on the trade.

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Spread betting on commodities works by enabling you to place a bet of a set number of pounds per point – known as your stake – on whether a commodity’s price is going to rise or fall. Then as your commodity moves, your stake will determine your profit or loss.

For every point it moves in your chosen direction, you’ll earn your stake as profit. But you’ll lose your stake for every point it moves against you. You’ll realise that profit or loss when you close your position.

Say, for example, that you bet £1 per point that gold is going to fall from its current price of $1,800.0. For every point that gold falls from 1,800.0, you’ll make £1. For each point it rises, you’ll lose £1.

A single point of gold movement is equal to $0.1 of movement in the precious metal’s price. So if gold falls to 1790.0, you’ll make £100. If it rises to 1,805.4, you’ll lose £54.

Learn more about how to trade commodities.

Lots of commodity day traders use spread betting to buy and sell a range of commodities alongside stocks, indices, forex and more. Spread betting brings lots of benefits for day traders, including leverage to make capital go further and the ability to go short.

You can even trade on the spot prices of commodities using our non-expiring commodity spot markets, and since day traders never keep a position open overnight you’ll never have to pay overnight financing.

However, using leverage and shorting will increase your potential losses, so a solid risk management plan is essential.