SHORT TERM SPREAD
Selling Vodafone.
Again using Vodafone as an example
Vodafone is trading at 116 -116.5
You think that the price of Vodafone is going to fall so you sell at 116 at £10 pounds per point.
The price falls to 112-112.5 so you buy back Vodafone to close yourposition. The price fell by 3.5 points so you made a profit of £35.00.
Conversely
Vodafone is trading at 116 - 116.5.
You sell Vodafone at £10.00 per point The Vodafone price rises to 120-120.5.
The price therefore moved 4.5 points against you resulting in a loss of £45.00
The more you are right the more you can profit from your judgement.
Of course however the more you are wrong the more you may lose.
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