What is a bid-offer spread?
Investors Europe Spreads current financial spreads can be obtained in respect of a multitude of markets by phone or via our website. Have a look at our Market Information Section. Investors Europe Spreads will normally quote a two-way dealing price on the financial instrument of your choice. ´
1. As a FIRST STEP you should enquire about the levels at which you can buy or sell any particular instrument.
Example : Dow Jones December is quoted at 10765-10775
Which means :
The first price, 10765 = bid price = price at which you can SELL the instrument
Selling the instrument is also referred to as “going short”
The second price, 10775 = offer price = price at which you can BUY
Buying the instrument is also referred to as “going long”
The difference between bid and offer prices is commonly called the spread.
Each quote applies for a specific market or instrument – e.g. Dow Jones -, and for a specified time or date in the future – e.g. December contract -.
Investors Europe Spreads current financial spreads can be obtained in respect of a multitude of markets by phone or via our website. Have a look at our Market Information section. Once you have obtained the current spread in respect of your market of choice, you may decide to do nothing at all or you may wish to back your opinion that the relevant market will either rise or fall in relation to the Investors Europe Spreads current quoted spread.
In summary :
IF you believe the market will RISE – you go LONG at the OFFER price - 10775
IF you believe the market will FALL – you go SHORT at the BID price - 10765
Note: It should be understood that you would not physically own the underlying equity, bond, currency, commodity etc. but you are simply betting on the price movement of the instrument in question
2. As a SECOND STEP, decide how much you want to stake per point movement of the market.
That is the amount of €, £ or $ you wish to bet in relation to each point movement of the instrument.
This is called the stake, which can be as low as £1.
The larger your stake, the larger the expected win or loss
When the transaction closes we would multiply the number of points up or down by the stake to calculate the total win or loss
To be covered against any adverse price move, Investors Europe Spreads always allocate a degree of risk to each individual market depending upon its perceived volatility and this factor is referred to as Initial Margin (IM).
The initial margin is the minimum amount required in your account to carry any particular bet.
Maximum stakes can be calculated by dividing the available capital on your account by the applicable IM rate of the market in question. The maximum size of your stake will ultimately depend on your account status. You may of course choose a stake of a lesser amount if you prefer.
Once you have decided on your stake and have chosen to buy or sell, our systems will check that you have the ability to place such a bet and if this is the case, you will then receive confirmation that the bet has been accepted which will include the date of the bet’s expiry.
Each bet will have a specific date on which it will settle. However, you do not have to wait for the bet to expire in order to realise any profits or losses.You may "settle", or close your trade at any time during our trading hours in relation to the relevant market simply by requesting a current quote and then betting in the opposite direction to the initial bet in the equivalent stake. For instance, if your first (opening) bet were a sell bet, you would close this trade by giving an instruction to buy the equivalent stake at the current quote. Once the bet is closed, any monies due to or from you will be immediately credited or debited to your account.
