Understanding 'buying' FTSE on spread betting

[SteveDMSmith]

Hello, I'm new to spread betting and dipping my toes in the water slowly. I have been looking at the FTSE and its recent volatility. It currently stands at around 5,500 points. A hypothetical question is the following

• I fund my account £ per point ie 5,500
• I 'buy'  £1 per point
• I enter a limit of 100 points

My assumption is that I won't lose any money (unless the FTSE remains permanently lower!) because I have funded £ per FTSE point, and that when the FTSE rises to 5,600 (ie current level plus 100 points) then the position will automatically close.

Is my assumption correct?

Thanks

Steve

[jimmy4876]

Yes you are correct but the FTSE could drop say, 1000 points before it goes back up to 5500 or even 5600. Just as you may gain £1 per point above 5500 (after you cover the spread) you will also lose £1 per point below 5500.  If it were to drop 1000 you would be £1000 in the hole. If you do not have those funds on your account IG will ask you to top up or close your position.

If you have a limit stop set your position will close automatically at 5600 yes.

 

Hope this was helpful.