Spread Trading

With Spread Trading , you can make spread trades on a variety of products including forex, indices, stocks and commodities.
Financial spread trading is very similar to regular futures and spot trading, in that you still trade on future market direction.
While you still either win or lose the difference between the opening and the closing price of a given financial instrument, the approach however, is slightly different.

Instead of opening a position for a certain transaction value, you choose a stake which represents the value for each pip by which the price moves.
You also choose a stop-loss, by which you set how much you are willing to lose.
This is your margin deposit. As with futures and spot trading, you can also benefit from falling markets by going short or long.
Your profit or loss is equal to your stake multiplied by the number of points by which the price has moved.

Spread Trading Example
You believe that the euro, now trading at EUR/USD 1.5620/1.5623 will further strengthen against the dollar.

You buy EUR/USD at 1.5440
Your stake: $5
Your stop loss: 1.5400

Your margin deposit is equal to your stake multiplied by the difference between the buying price and your stop loss (in terms of points).

Your margin deposit: $5x (1,5440-1,5400)
= $5×40 = $200

Your prediction was correct and the EUR/USD is now trading at 1.5500/1.5502

You decide to sell and lock in your gain.

Your profit:

The difference between the opening and the closing price (in pips) multiplied by your stake.

Your profit = (1,5500 – 1,5440) x$5= 60x$10
Your profit = $600