Buy 1000 ABC shares @£1 (100p) will cost you £1000 +£8= Cost £1008
Hold onto them until they reach £2 then sell = £2000 - £8 - 10%tax = £1792= £784 profit
It is unlikely that a stock will double in price in a day, it often takes a year to double. But you physically own the shares (certificate) and can sell them whenever you want so potentially only sell them when you’re in profit.
ABC has buy price 100p and sell at 90p
your £1000 will allow 1000/(price x margin) = 1000/(100 x20%)= £50 per point
So straight away you will be down 50xspread = £500. But then you would only need the ‘sell’ price to rise to 120p to make a 1k profit ((120-100(your buy price))x50. Having said that if the sell price dips lower by 20 points to 70p then you will lose your £1000
You can see from this spread betting is riskier especially if you want to trade a low cost share because your stake (the price per point) is higher. But the leverage gives you access to more shares (which you don’t own). In the example your £1000 is actually representative of ((1000/margin)x100)= 5000 shares
I think what everyone was trying to say is that with spread betting it is unlikely you will find a low price share that has a low margin or low stake (cost per point).
With spread betting you would need to stake a lot of money to get a few point movement on a low price stock, OR you need a lot of movement if you don’t want to stake much money.
(I hope I haven’t confused you even more, but I had already written and saved this before @TrendFollower @Caseynotes or @JamesIG tried explaining to you, and if there’s any error in my explanation people please let me know. I am knew to spread betting myself)
@nit2wynit do the tutorials in the IG academy before you even play with the demo account.