Example Spread

Let’s look at the benchmark index of the UK’s leading companies, the UK100, which represent the underlying FTSE100. Our spread equals 1 point. In order for you to make profits the market has to move by at least one point. So, if you bought while our quote was 5903.50-5904.50, the market has to move by one point in your favour, before you start making profit. If it moves to 5904.50-5905.50, you break even, as you will sell at 5904.50 to close the position. Any price higher than that means you are in profit.

If the spread was 2 points, then you would need to wait for the markets to move at least by 2 points, before starting to make any profits. Hence, the smaller the spread, the quicker you may get into profits, as it takes less of a movement.