Buying and selling

In every market, there are buyers and sellers. Understanding how their relationship works – and how it influences the markets – is an important part of spread betting.

When you spread bet, you’re notionally either ‘buying’ or ‘selling’ a financial asset. Buyers – also known as ‘bulls’ – believe an asset’s value is likely to rise. Sellers – or ‘bears’ – generally think its value is set to fall.

How do buyers and sellers affect the markets?

At any given time, one group tends to outweigh the other, and that’s one of the reasons the price of a market fluctuates. 

When the buyers outweigh the sellers, demand for the market rises. As a result, the price of the asset climbs

When it’s the other way round, supply increases and demand for the asset starts to drop – and the price falls.

Market fluctuation and volatility explained | Buying and selling in financial markets |

The way supply and demand affects markets is often referred to as volatility.

Going long and short

In traditional trading, you generally buy an asset in the expectation its price will rise so you can sell it later for a profit. This is called going long. However it’s considerably more difficult to take advantage of falling prices – also called short selling or going short.

Going long and short | Buying and selling in financial markets |

With spread betting, because you never actually own the underlying asset, betting on the value of an asset falling is just as straightforward as betting on it rising.

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