Trade shares with ETX Capital
Trading shares with ETX Capital couldn’t be easier.
You can place rolling daily bets on shares from a range of international indices using our trading platform.
Here is the list of the indices on which we offer shares spread betting:
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What are shares?
Shares - also called stocks - offer investors the opportunity to buy a stake in a specific company and to benefit from any profits that this firm makes.
Traditional share trading enables you to buy and sell your shares on the stock market, allowing you to take advantage of favourable price movements. Alternatively, you can remain a shareholder with any given company and receive dividend payments when it does well.
Spread betting on shares is an alternative way to speculate on the performance of a particular firm, although you will never actually own the stocks in question.
Instead, you can place a bet per point of movement on the share price. As you will not hold the underlying shares, you can bet on a firm's share price going up or down, giving you the chance to profit from a rising or falling market. Remember should the markets move against you losses will be incurred.
All about shares trading
There are stock exchanges all over the world, each one listing the largest publicly traded companies in the country in which it is established.
Share prices are based on expectations about a firm's future performance. This means businesses with good prospects for growth and earnings are likely to command a higher share price than those where investors are uncertain about the outlook.
There are several fundamentals that are taken into account when calculating an organisation's share price, including the industry it operates in, its financial standing, growth plans and the management team.
Company news and announcements - particularly those relating to earnings - can have an impact on the share price.
Share values can also be affected by the overall performance of the sector in which the business works. For instance, if the outlook for the mining industry is negative, this is likely to drag shares in mining companies lower.
A shares spread betting example
When spread betting on shares, you won't be buying the underlying stocks, you will simply be speculating on their performance.
This means you will need to decide whether you expect the share price in question to rise or fall and place your bet accordingly.
Spread betting is a form of leveraged trading, which offers the potential for much larger profits or losses than the initial stake you invest in the position.
You will be quoted two prices by your ETX Capital - the bid and the ask. If you believe the value of the stocks in question will fall, you would 'sell' at the bid price (always the lower figure). Conversely, if you anticipate the share price rising, you would 'buy', taking the offer or the ask.
Here is an example of a daily rolling shares spread bet:
We'll use the fictitious company ABC Industries.
The quote is 396p - 397p. The firm is due to announce its interim results and you believe these will be better than expected.
You therefore decide to accept the offer price of 397p and you wager £10 per point that the share price rises.
At this point, you should calculate your total trade consideration - 397p x £10 = £3,970. You will then need to use this figure to work out the margin requirement in order to secure the trade.
ETX Capital has a five per cent margin requirement on this stock, so in this case you will need £198.50 in your account to open the position.
Four days after you open the position, ABC Industries announces its results and your predictions are correct.
The share price climbs and is now trading at 413p - 414p. You decide to close your position by 'selling' at the bid price of 413p.
This equates to 16p movement - so a £160 profit for you. However, because you allowed the trade to rollover for four days, you need to deduct the rollover costs from this sum.
ETX Capital charges 2.50 per cent plus the LIBOR rate (let's say this is one per cent for this example) - so 3.50 per cent of the trade.
The fee is worked out by multiplying your total trade consideration by the rollover percentage, dividing this figure by 365 and multiplying it by the number of days you keep your position open.
So, in this instance, it would be calculated as:
£3,970 x 3.50 per cent / 365 x 4 = £1.52
Therefore, you total profit for this trade is £160 - £1.52 = £158.48
Of course, you should note that had the share price fallen, rather than risen, you would have stood to lose £10 per penny of movement. When spread betting, you always need to bear in mind that you can incur substantial losses should the markets move against you.
Rolling Shares Appendix
1. Spreads
The ETX Capital spread is added to both the underlying market bid and offer spread which varies throughout the day. Please contact the dealing desk for further information on an individual equities spread. Also note that market spreads can vary significantly, particularly at the start and end of a trading day.
2. IMR (Initial Margin Requirement)
Margin rates differ between individual equities, please see online product information (the ‘i’ button on the trading platform) for each individual equity markets set margin. As a rule of thumb the greater the liquidity of the underlying share the lower the margin rate.
3. Trading hours
These are the usual hours of business but may vary where daylight saving applies or where there is a market holiday. All times are expressed as London time. Unless stated trading hours are for Monday to Friday.
4. Overnight finance adjustments
If you hold a position in one of these markets overnight, a finance adjustment is made to your account shortly after the stock market closes.
This is calculated as follows:
f = (s x p x ir) / d
where
f = daily financing adjustment
s = your stake
p = closing price of rolling market as determined by ETX Capital
ir = interest rate, including plus 2.5% for long positions and minus 2.5% for short positions.
d = number of days, i.e. 365 for UK and 360 for all others
Long (buy) rolling bet positions are debited a daily financing adjustment
Short (sell) rolling bet positions are credited a daily financing adjustment
The daily financing fee will be applied to your account each day that you hold an open position (including weekends and holidays).
There may be instances when a daily financing fee is charged to you on short positions, rather than paid to you. This may occur if LIBOR is at an exceptionally low rate.
5. Minimum / Maximum Bet Sizes
Minimum and maximum bet sizes vary from equity to equity, according to the value of the share and its underlying liquidity.
Please see the online product information (the ‘i’ button on the trading platform) for each individual equity markets min and max size.
Please note, ETX Capital may modify the maximum stake size available for a market in some circumstances, for example, during fast-moving or low liquidity markets.
Further information
Dividends
Any rolling equity position held on account after market close the day before an ex dividend event is adjusted as follows:
|
Credit |
Debit |
| UK Shares |
90% |
90% |
| USA Shares |
85% |
100% |
| Most Euro Shares |
85% |
100% |
| Sweden |
95% |
100% |
Please contact dealing desk for a specific European Country and for all other countries not listed.
Short Selling
There may be restrictions or additional costs associated with shorting an equity, especially if the equity becomes difficult to borrow. There may even be circumstances where we might have to close out your position.
Daily settlement appendix
1. Spreads
The ETX Capital spread is added to both the underlying market bid and offer spread which varies throughout the day. Please contact the dealing desk for further information on an individual equities spread. Also note that market spreads can vary significantly, particularly at the start and end of a trading day.
2. Trading hours
These are the usual hours of business but may vary where daylight saving applies or where there is a market holiday. All times are expressed as London time. Unless stated trading hours are for Monday to Friday.
3. Minimum / Maximum Bet Sizes
Minimum and maximum bet sizes vary from equity to equity, according to the value of the share and its underlying liquidity. Please see the online product information (the ‘i’ button on the trading platform) for each individual equity markets min and max size. Please note, ETX Capital may modify the maximum stake size available for a market in some circumstances, for example, during fast-moving or low liquidity markets.
4. Basis of settlement
The daily settlement equity contracts settle at the official London Stock Exchange price for the underyling market. There is no rollover on these contracts.
5. Daily settlement equity
A number of shares will be available to trade daily as a daily settlement bet. These will be predominantly FTSE 100 shares, but may consist of others. These bets will expire and settle each day against the official closing price of the respective underlying share.