Shares are one of the most popular and well-known financial assets available. By buying a share, you buy a small part (or ‘unit of ownership’) of a company, meaning you also receive your own percentage of the company’s profits in the form of dividends.
When you spread bet, you’re betting on whether the price of these shares – which reflects the value of the company as a whole – will rise or fall. As you don’t own the share itself, you will not receive any dividends.
A stock index is essentially a number representing a group of shares from a particular exchange, area, region or sector. For example, the FTSE 100 is an index reflecting the value of the 100 largest companies listed on the London Stock Exchange (LSE).
Each index has a market price based on the collective value of those shares. When you spread bet, this is the number you’re betting on.
Forex – short for foreign exchange – is how individuals and businesses convert one currency to another. It’s the largest, most frequently traded market in the world, and it’s always quoted in pairs, eg GBP/USD (the British pound vs the US dollar) or EUR/JPY (the euro vs the Japanese yen).
Commodities are natural resources like gold, oil, wheat and lumber. They’re traded on dedicated exchanges around the world, and their prices can vary dramatically because of supply and demand, the weather, natural disasters or geopolitical events.
Each commodity is priced uniquely – gold in dollars per troy ounces, for example, or oil in dollars per barrel – but in each case, you’re simply betting on whether its value will rise or fall.
A digital 100 is a bet on a ‘yes or no’ statement about a financial market. For example, you might be presented with the following: ‘The FTSE 100 will reach price level xxxx before the end of the day’.
You can either buy the digital 100 if you think the statement will be true, or sell it if you think it’ll be false. Get it right and you profit. Get it wrong and you lose.
Exchange traded funds (ETFs) are a way to track the performance of a selection of related assets, such as shares, commodities, bonds, currencies, etc. Traditionally they’re traded on stock exchanges, but when you spread bet on them you’re simply predicting whether their value will go up or down.
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