Buying or selling shares can seem at first to be a little
mysterious and daunting - well at least that is the way it used to be. You
phoned a broker who dazzled you with jargon and quoted a price at which you
could buy or sell. You couldn’t sell short (sell shares you didn’t own first)
unless you were a professional market participant.
Today, via a spread betting company like Spreadex, you can
go long or short any of the FTSE 350 and some non-FTSE 350 stocks and hundreds
of leading US and European stocks using our slick trading platform or by
calling our friendly, experienced telephone traders.
An example: Let's say you look at the price of British
Airways and think at £1.50 the share price is too high – you feel the recession
and volatile oil prices will impact BA’s share price.
You sell £20 of BA at £1.50 setting a stop loss at £1.80,
therefore risking a maximum of £600 (150 – 180) x £20 = -£600. It meanders between £1.40 and £1.70 for a few weeks until
it suddenly and dramatically starts to move in your favour.
It dips to £1.00 and you decide to close your position
(ending your bet by buying back at £1.00 for the same stake), meaning you make
a profit of £1,000 (150 – 100) x £20 =
£1,000). If the share price had gone to £1.80 your stop would have been
triggered and you would have lost £600.