Spread betting companies offer different types of account to cater for people with different skill level and starting capital. Generally spread betting accounts can be divided into 3 main types. It is easier to talk about these accounts in general terms because each spread bet provider will offer a different flavour to their accounts. This way you can find an account that really suits you.
The features to be considered include spread betting accounts which require cleared funds, limited risk accounts and credit accounts. There are other factors that should play a part in deciding what spread betting account to open, for example, minimum bet size. Lets look at each in turn.
Cleared funds account ?
To open a cleared funds spread betting account the funds deposited need to be sufficient to cover the deposit on each bet you make. The deposit required depends on the margins required by the spread betting company. So, a company with a low margin requirement would benefit you because you would not need as much money in the account to cover the deposit. The amount of deposit will also depend on the size and type of bet. Margin requirements on some bets are more than others. Typically currency bets would have larger margin requirements than shares.
Limited risk accounts
The aim of this type of account is to limit your risk. They do this in various ways.
One way is to allow you to only bet with cleared funds. Another way is to place automatically generated guaranteed stop loss orders. We will explain these later.
With a credit account usually you don’t have to provide a deposit when you open a bet. This is the riskiest type of account, because you can end up owing the spread betting company money. A lot of dicipline is required with this sort of account and strict money management should be used, such as have a stop loss policy. These types of account are good becuase you don’t to make sure you have money available in the account.
To opend this sort of account the spread betting company with ask you to verify if you are creditworthy, for example, you may need to prove what sort of liquid assets you have.
Other important things to consider when opening a spread betting account include what the minimum account balance needs to be for a cleared funds account or limited risk account. The minimum stake size may be important to you. If you’re a beginner you may want to bet with a low stake size. You’ll need to now what margin requirements they have (the lower the better). If you trade a lot you’ll probably want tight spreads. The tighter the spread the more better the return. If you’re trading futures contracts then the spread is not as important. Spread bets are offered for a specific period of time, like one day or for 3 months. Some spread bet providers offer rolling bets allowing you to roll into the next time period. If you’ll be using these you need to now how much the company will charge you. Different providers tend to be good in one or many two of these areas. It is hard to find a provider that excells in all the areas mentioned above. Our advice is to open more than one account depending on what you need.
Lastly it’s good to now what added extras there are, for example telephone customer service. Also, you’ll want a user friendly trading platform. Or you may want to spread bet a specific sector.