Products

WorldSpreads is a financial services company. We specialise in dealing with individual (retail) clients, as opposed to financial institutions or brokers. We aim to provide investors with a simple, low cost, tax efficient way to trade individual shares, foreign exchange, stock market indices, commodities and interest rates. Clients may trade via our inter-active website or by telephone. Clients may trade the markets using any of the following methods: Financial Spread Trading CFDs (Contracts for Difference) Foreign Exchange Futures & Options We also provide a ‘Managed Accounts’ service for clients who would like to participate in the markets but have neither the time nor the knowledge to trade for themselves. You may read more about this service below.

Ways to Trade with WorldSpreads

Financial Spread Trading
Financial spread trading is a type of trading that allows you to speculate on the price of a whole range of financial markets, such as shares, currencies, indices or commodities. WorldSpreads would quote you the price of the market, such as 1.6650-1.6652 in the case of GBP/USD, and you would ‘buy’ at 1.6652 if you believed the price was going up, or sell at 1.6650 if you believed the price was going down. Once you decide whether you wish to buy or sell, you must then decide on a ‘stake’. The ‘stake’ determines how much risk you are prepared to take. A relatively small stake of “£1 per tick” movement would mean that you would make or lose £1 for every 1 tick (or 0.0001) movement in the price of GBP/USD. A relatively larger stake of “£100 per tick” movement would mean that you would make or lose £100 for every 1 tick (or 0.0001) movement in the price. Financial spread trading has exploded in popularity as a way to trade the financial markets over the past 10 years because of the versatility of the product and the clear advantages it has over other ways of trading the market. Advantages of Financial Spread Trading: You can trade on ‘margin’ or ‘leverage’, which means you only need to deposit a small percentage of the value of the trade you are placing. You pay no Capital Gains Tax on any profits you make. It should be noted that tax laws can change and you should seek advice on your own tax situation. You can trade thousands of markets using a single account. You pay no commissions on your trades. You can speculate on markets going down (i.e. shorting) as well as going up. You can trade US shares in Sterling or Euro, for example, thereby eliminating any US Dollar foreign exchange you would have. We would recommend that you take our Online Training Tutorial on Financial Spread Trading before you commence trading. Similarly, we would recommend that you commence with a ‘Demo’ Account, if you are new to Financial Spread Trading.

CFDs
A CFD (Contract for Difference) is a financial instrument. It is simply an agreement between the company (i.e. WorldSpreads) and the client to exchange the difference in value of a particular share between the time at which the contract is opened and the time at which it is closed. For example, Ryanair is trading at £4.50 - £4.51. If you believe the price is going up, you buy at £4.51. If you believe the price will fall, you sell at £4.50. You decide to buy 10,000 shares at £4.51. In two weeks time the price has risen to £4.75 to £4.76. You close your position by selling at £4.75, realising a profit of 24p on 10,000 shares, which is £2,400. CFD trading is very similar to normal share dealing. You deal at the ‘cash’ price of the share (i.e. the price quoted on the relevant exchange, as opposed to a price with a spread around it), and you pay a commission which is calculated as a percentage of the value of the transaction. Commission rates for major shares is usually about 0.10%, or £100 on a £100,000 transaction. The key difference between trading CFDs and buying shares through a normal stockbroker is that you do not have to pay for the full value of the shares when you are trading CFDs. Instead, you typically only deposit 10% of the value of the position you are taking. In the example above, if you buy the equivalent of 10,000 shares in Ryanair at £4.51, the value of this position is £45,100. To place this trade, you would only need to deposit 10% of this, namely £4,510. It is important to know that for Geared (or leveraged) products like CFDs, you can lose more than your initial deposit and your loss has potential to be far greater than for non-geared products. CFDs can be used to trade an extremely wide range of financial products, from individual shares, the level of Wall Street to the value of the Euro against the Dollar. We would recommend that you take our Online Training Tutorial on CFDs before you commence trading.

Foreign Exchange
The Foreign Exchange market is the most heavily traded and most liquid market in the world, with trillions of Dollars per day being traded by the banks, speculators and hedge funds. In market terminology, this is also known as the ‘Spot Foreign Exchange Market’. While many people use ‘Spread Trading’ or ‘CFDs’ to trade the foreign exchange markets, many others like to trade the currency markets using a product known simply as ‘Foreign Exchange or Spot Foreign Exchange’. In essence, you are doing almost the exact same thing trading ‘Spot Foreign Exchange’ as you are “Spread Trading on the Foreign Exchange Markets”. You ‘buy’ if you think the price is going to go up or you ‘sell’ if you think the price is going to fall. The only real difference between the various ways of trading is how the market is quoted. In the ‘Spot Foreign Exchange’ market, you buy or sell an amount of Dollars, Euro or Sterling or whatever currency pair you are trading. For example, you could buy Sterling £1m against the US Dollar at 1.6655. For every 0.0001 cent move in the price you would win or lose $100. If the price moved to 1.6656, you would win $100; if the price moved to 1.6654, you would lose $100. Therefore, trading the currency markets using ‘Spot Foreign Exchange’ means you buy or sell a fixed amount of Sterling or Dollars, whereas trading the currency markets by ‘Spread Trading’ means you specify an amount ‘per point movement’ that you would like to trade. For example, buying £1,000,000 against the US Dollar in the ‘Spot Foreign Exchange’ market means you win $100 for every 0.0001 cent rise in the price. This is the exact same as buying $100 per point on a Spread Trade. We would recommend that you take our online tutorial on Foreign Exchange before you commence trading the currency markets.

Futures & Options
A Futures contract is a standardised contract to buy or sell a specified commodity of standardised quality at a certain date in the future at a market-determined price (the futures price). The contracts are traded on a futures exchange and are a type of derivative contract. Historically, futures contracts were related to traditional ‘commodities’, such as wheat or orange juice, but today there is a huge market also in financial futures, such as currencies, stock indices or interest rates. A tiny commission is charged on each transaction. WorldSpreads offers clients the ability to trade the full range of Futures markets. We would recommend that you take our online tutorial on Futures before you commence trading futures.
Options, sometimes called Traded Options, are derivative contracts on most of the world’s financial and commodity markets. Options come in two primary forms – Calls and Puts. A Call option gives the holder the right, but not the obligation, to buy a fixed number of shares of the underlying stock at a fixed price within a fixed period of time. A Put option gives the holder the right, but not the obligation, to sell a fixed number of shares of the underlying stock at a fixed price within a fixed period of time. Call options generally rise in value when the underlying asset rises in price. Put options generally rise in value when the underlying price falls in value. One of the most important factors affecting the value of all options is Volatility and you should not consider trading options until you fully understand how this works. A premium is paid by the person buying an option and the premium is received by the person selling the option. We would recommend that you take our online tutorial on Options before you commence trading Options.

*Tax laws are subject to change and you should consult with your financial advisor to determine your own tax status.