Hi guys,
Trying to understand the basics of spread betting and I got confused with the following doubt.
Let's say that you want to spread bet on the currency pair GBP and EUR and you think GBP is going to get stronger.
I was thinking that on 12th Jan 2015 you could either:
If you bet £1 per point in both cases and after a few months you are correct and GBP gets stronger to, let's say GBPEUR 1.50 (EURGBP 0.6667).
How is that if you decided to go long GBP on the GBPEUR chart you end up with a profit of £1,900 = (1.50-1.31)*10000*£1
whereas if you decided to short the EUR on the EURGBP chart you end up with just £967 = (0.7634-0.6667)*10000*£1
Is there any logic to choose one chart over another depending on certain circumstances? I cannot understand how's that you were correct in the starting and end point in both situations but with one bet you end up with over double profit than with the other... or am I calculating something wrong?
Many thanks!
Trying to understand the basics of spread betting and I got confused with the following doubt.
Let's say that you want to spread bet on the currency pair GBP and EUR and you think GBP is going to get stronger.
I was thinking that on 12th Jan 2015 you could either:
- open the GBP/EUR chart and buy GBP, for example at 1.31
- OR open the EUR/GBP chart and sell EUR, for example at 0.7634
If you bet £1 per point in both cases and after a few months you are correct and GBP gets stronger to, let's say GBPEUR 1.50 (EURGBP 0.6667).
How is that if you decided to go long GBP on the GBPEUR chart you end up with a profit of £1,900 = (1.50-1.31)*10000*£1
whereas if you decided to short the EUR on the EURGBP chart you end up with just £967 = (0.7634-0.6667)*10000*£1
Is there any logic to choose one chart over another depending on certain circumstances? I cannot understand how's that you were correct in the starting and end point in both situations but with one bet you end up with over double profit than with the other... or am I calculating something wrong?
Many thanks!
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