Turbos

What are Turbos?

Turbos (formally Listed Contracts for Difference) are an alternative to trading shares without having to pay the full price of owning the stock. They also provide the opportunity to profit from both falling and rising markets by allowing sales in anticipation of an expected fall in value.

Turbos, are listed on the London Stock Exchange (LSE), and combine the flexibility of a derivative contract with the price transparency of the LSE.

How do Turbos work?

Turbos offer exposure to a given asset such as a share or index but you are only required to pay a margin, typically between 5% and 15% of the value of the trade. This means you can trade in larger positions than if purchasing the actual shares and there is the potential to make much higher returns, or of course, losses if the direction of the trade is wrong.

You also know the cost of your investment up front as all financing fees and dividends are included on the initial price with no additional margin payments required even if the price moves against you. Turbos embed a knock-out barrier stop loss at no extra cost so that you can never lose more than your initial margin payment.

There are 2 ways to trade Turbos:

Going Long

To buy shares that you expect to rise in value, so as to sell them at a later date to make a profit, you would open a 'long' position.

Going Short

You would open a 'short' position to trade a share that you expect to fall in value, so as to buy them back at a cheaper price. The difference between the opening and closing price would be counted as profit should the price fall as expected.

How risky are Turbos?

Before trading you should fully understand the nature of Turbos and the extent of your exposure to risk.

While the maximum loss is limited to the initial margin payment you make, you should not open a Turbo position unless you are prepared to lose the entire margin plus any commission charges. If you are in any doubt you should consult an Independent Financial Advisor.

What Account do I need to invest in Turbos?

You can invest in Turbos through our Trading Plus or SIPP accounts.