A stake per point tells you how much a financial spread bet gains or loses for each point the market moves. At £2 per point, a favourable movement of 50 points produces a £100 trading profit. An adverse movement of 50 points produces a £100 trading loss, before any separate charges or adjustments.
The arithmetic is straightforward. The mistakes usually come from counting points incorrectly, using the wrong side of the quote, or treating the stake as the maximum amount at risk. This guide covers the calculations; the broader financial spread betting guide covers the product and its place in speculative trading.
What Does a Stake per Point Mean?
Your stake is the cash value assigned to one betting point. It is not the purchase price of the position, and it is not a one-off payment that caps your loss.
Suppose you open a position at £3 per point. Every favourable point adds £3 to the trading result; every adverse point subtracts £3. A 10-point loss costs £30, while a 100-point loss costs £300. The same multiplier applies in both directions.
This distinction between a unit stake and total financial risk is central to HMRC’s explanation of spread betting stakes. A small-looking stake can generate a much larger loss because it applies repeatedly across the price movement.
Increasing the stake from £2 to £6 per point triples both profits and losses for the same entry and exit prices. It does not improve the trade’s chance of success. It simply changes how much each point is worth.
Check What Counts as One Point
A betting point is the price movement defined in the contract specification. Do not assume that it always means a movement of 1.00 on the screen, or the smallest decimal change displayed.
Use this conversion before calculating the cash result:
Movement in betting points = price difference ÷ price movement represented by one betting point
The examples below use assumed contract definitions, not universal specifications.
| Market example | Assumed definition of one point | Example price movement | Betting points moved |
|---|---|---|---|
| Stock index | 1.0 index unit | 8,000 to 8,025 | 25 |
| UK share quoted in pence | 1 penny | 250p to 257p | 7 |
| GBP/USD quoted as an exchange rate | 0.0001 | 1.2700 to 1.2725 | 25 |
| Commodity contract | 0.1 quoted price unit | 75.0 to 75.8 | 8 |
In the GBP/USD example, the difference is 0.0025. Dividing by 0.0001 gives 25 betting points. At £4 per point, that movement represents £100, with the sign depending on your direction and actual dealing prices.
Extra decimal places do not automatically create extra betting points. If an index contract defines one point as 1.0, a move from 8,000.0 to 8,000.5 is half a point. At £4 per point, it changes the trading result by £2.
Check the stake currency too. In an example expressly defined as £4 per point, the multiplier is already in sterling, even if the underlying market is quoted in dollars. Do not apply a second currency conversion without checking the contract and account terms.
The Spread Betting Profit and Loss Formulas
For a position opened by buying, known as a long position:
Trading profit or loss = (closing sell price − opening buy price) ÷ point size × stake per point
For a position opened by selling, known as a short position:
Trading profit or loss = (opening sell price − closing buy price) ÷ point size × stake per point
A positive answer is a profit; a negative answer is a loss. Here, “point size” means the movement in quoted price units that equals one betting point. If prices are already expressed in betting points, no further conversion is needed.
Use executed prices, not the chart’s last price or the level you hoped to receive. These formulas include the effect of the dealing spread when you use the correct entry and exit prices. They exclude separately booked charges and adjustments.
Worked Examples: Buying and Selling
A long index spread bet
Assume an index is quoted at 7,998 sell / 8,000 buy, with one betting point equal to one index unit. You expect it to rise and buy at 8,000 for £3 per point.
Later, the quote reaches 8,045 sell / 8,047 buy. You close the long position by selling at 8,045.
(8,045 − 8,000) × £3 = £135 profit
The exit uses the sell price, not 8,047. Choosing the higher quote would overstate the result by £6.
If the market instead falls to 7,960 sell / 7,962 buy and you sell to close at 7,960:
(7,960 − 8,000) × £3 = −£120 loss
A short index spread bet
Return to the original quote of 7,998 sell / 8,000 buy. This time, you expect a fall and sell at 7,998 for £2 per point.
The market falls to 7,948 sell / 7,950 buy. To close the short position, you buy at 7,950.
(7,998 − 7,950) × £2 = £96 profit
If the quote instead rises to 8,038 sell / 8,040 buy, closing at 8,040 gives:
(7,998 − 8,040) × £2 = −£84 loss
The direction changes the subtraction order. The stake still measures cash per point. For both examples, the result becomes realised when the closing trade executes; a valuation while the position remains open can still change.
How the Spread and Other Costs Affect the Result
The spread is the difference between the sell and buy quotes. In the opening quote above, it is two points. Buying at 8,000 and immediately selling at 7,998 would lose two points, assuming the quote and execution prices remain unchanged.
At £3 per point, that is a £6 loss. The market must move far enough for your closing sell price to reach your opening buy price before the long position breaks even on price alone.
Separate charges also matter. Overnight funding can reduce a positive trading result, and the FCA’s review of spread betting and CFD pricing identifies funding and other costs as expenses that should not be overlooked when comparing spreads.
Net result = trading profit or loss + separate credits − separate charges
Suppose the long index example earns £135 from its executed prices. If the position incurs £8.40 in funding charges and receives a £3 adjustment credit, its net result is:
£135 − £8.40 + £3 = £129.60
Those charges and credits are hypothetical. Their application depends on the contract, direction and holding period.
Do not subtract the £6 spread cost again. It is already reflected in the opening buy price and closing sell price. Double-counting the spread makes an otherwise correct calculation wrong.
You can also express separate costs in points. A £9 charge on a £3-per-point position requires another three favourable points to recover. The mechanics of funding and adjustments are covered in spread betting costs.
Working Backwards from a Planned Loss
Rather than choosing a stake and then discovering its consequences, you can calculate a stake from a planned cash loss and an intended exit distance.
Stake per point = planned price-movement loss ÷ stop distance in betting points
Suppose a hypothetical plan allows £100 for the price movement between entry and stop, and that distance is 40 points:
£100 ÷ 40 = £2.50 per point
This is a sizing illustration, not a recommended risk amount. Deciding what an account can reasonably expose to one trade requires a wider trading risk budget and position sizing process.
Measure the distance from the expected executable entry price to the relevant closing price at the stop. A distance measured from a chart’s midpoint can miss part of the spread.
If £100 is intended to include all costs, reserve an allowance before dividing. With £10 set aside for assumed charges and execution variation, £90 remains for the planned 40-point movement:
£90 ÷ 40 = £2.25 per point
A cash allowance does not guarantee a loss ceiling. Ordinary stop orders can execute beyond their requested level when prices gap or move quickly. In this example, a 60-point loss at £2.25 per point would cost £135 before separate charges.
Check minimum stakes and permitted increments before placing the order. If the calculated stake is below the contract’s minimum, rounding up increases the planned loss. Skipping the trade is an available choice. The differences between ordinary and guaranteed exits are covered in stop-loss orders and guaranteed stops.
Stake, Margin and Exposure Are Different Numbers
The stake determines how much each point is worth. Margin is money required to support the position. Neither should be mistaken for the maximum loss on that individual trade.
Consider a simplified index contract priced at 8,000, with one betting point equal to one index unit and a stake of £2 per point. Its equivalent notional exposure is:
8,000 × £2 = £16,000
If an assumed margin rate of 5% applies, the initial margin is £800. A subsequent 100-point adverse movement still loses £200. The loss calculation uses £2 per point, not the £800 deposit.
For applicable UK retail accounts, FCA rules on restricted speculative investments require account-level margin close-out protection and negative balance protection. Negative balance protection concerns funds in the relevant trading account; it does not turn each position’s initial margin into an individual loss cap.
The £16,000 exposure calculation also shows why a £2 stake is not necessarily a small position. At an index level of 8,000, a 1% fall is 80 points, producing a £160 loss at that stake before costs.
Keep margin availability separate from your planned loss calculation. Having enough money to open a position does not establish that its risk fits your budget.
Calculating Partial Closures and Multiple Entries
When you close part of a position, calculate the realised result on the stake actually closed. The remaining stake continues to respond to price changes.
Suppose you buy an index at 8,000 for £4 per point, with one point equal to one index unit. You then close £1.50 per point at 8,040:
(8,040 − 8,000) × £1.50 = £60 realised profit
The remaining stake is £2.50 per point. If you close it at 8,020:
(8,020 − 8,000) × £2.50 = £50 realised profit
The combined trading profit is £110 before separate charges and adjustments. Using the original £4 stake for both exits would count part of the position twice.
For multiple entries into the same contract, calculate each portion separately or use a stake-weighted average entry. Buying £2 per point at 8,000 and £3 per point at 8,020 gives:
Average entry = [(£2 × 8,000) + (£3 × 8,020)] ÷ £5 = 8,012
Closing the full £5-per-point position at 8,050 produces £190: 38 points multiplied by £5. This method assumes identical contract terms and point definitions. Do not combine different expiries or differently specified markets just because their names look similar.
A Final Calculation Check
Before submitting an order, write down five items:
- The contract’s definition of one betting point.
- The stake amount and stake currency.
- The executable entry price and correct side of the exit quote.
- The cash effect of an adverse move, plus expected separate costs.
- The margin required and money remaining available in the account.
Review spread betting margin requirements and account close-outs separately from the trade’s profit calculation. A correct forecast is no help if the account cannot support the position long enough for it to play out.
The calculation to retain is simple: convert the executed price difference into betting points, apply the correct direction, multiply by the stake, then include separate charges and credits. Small errors in any of those inputs become cash errors in the account.