Spread Betting Beginner Questions

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Kate7777

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Hi everyone,

I've been browing the forums for a while but have just signed up so I hope I'm posting in the right place :)

I've been looking into spread betting for a while (and trying to get my head around it) and have some initial questions I'd be grateful if anyone could answer or point me in the right direction.

I've heard of of people betting at 1p per point but all of the companies I've looked at offer a min. £1 per point (or 50p in some instances), does anyone know of a reputable company who offers 1p per point?

With regard to stop losses - if the spread is 6035-6037 and you place a stop loss at 5097 would that place any cap on your potential winnings or are you really allowed to cap your potential losses but not your potential winnings?

Do companies vary in the stop losses they will allow? As a new trader I would like to start with 1p per point and play with a stop loss but I'm not sure if the available stop losses (is min. stop loss a term?!) vary dramatically from company to company.

I'm aware that you can lose more than you're stake but if I sign up for a deposit only account will I be limited to only losing what is in my account (ie. if I have £50 in my account and try and place a bet with a stop loss that would risk losing £80 would it stop be placing the bet or would it let me place the bet and reduce my balance to -£30 if I went on to lose)?

Thanks for reading, appreciate any help or advice!
 
Kate7777 said:
Hi everyone,



I've heard of of people betting at 1p per point but all of the companies I've looked at offer a min. £1 per point (or 50p in some instances), does anyone know of a reputable company who offers 1p per point?

!
Click to expand...

There is no such thing as a reputable spread betting company. Some may rip you off less than others.
 
Had to read that a couple to make sense of it but if I've understood it correctly then I'm shocked, also naive obviously but still shocked lol

Seems that in addition to understanding the facts around how to place bets, the market etc one must also be aware of the realities of trading and how things operate in practice rather than in theory.

Every time I think I'm beginning to understand it, I end up with 10 more questions (at least!)
 
Kate7777 said:
Hi everyone,

I've been browing the forums for a while but have just signed up so I hope I'm posting in the right place :)

I've been looking into spread betting for a while (and trying to get my head around it) and have some initial questions I'd be grateful if anyone could answer or point me in the right direction.

I've heard of of people betting at 1p per point but all of the companies I've looked at offer a min. £1 per point (or 50p in some instances), does anyone know of a reputable company who offers 1p per point?

With regard to stop losses - if the spread is 6035-6037 and you place a stop loss at 5097 would that place any cap on your potential winnings or are you really allowed to cap your potential losses but not your potential winnings?

Do companies vary in the stop losses they will allow? As a new trader I would like to start with 1p per point and play with a stop loss but I'm not sure if the available stop losses (is min. stop loss a term?!) vary dramatically from company to company.

I'm aware that you can lose more than you're stake but if I sign up for a deposit only account will I be limited to only losing what is in my account (ie. if I have £50 in my account and try and place a bet with a stop loss that would risk losing £80 would it stop be placing the bet or would it let me place the bet and reduce my balance to -£30 if I went on to lose)?

Thanks for reading, appreciate any help or advice!
Click to expand...

Pboyles is more or less right and if you want to take trading seriously at some point you'll move to trading the real market.

That said, I think SB can be OK for learning on with very small stakes.

1p per pip/point etc

You'll have to look around. I'm not aware of an SB company that does this but I think Alpari (a forex 'broker') allows you to trade from a few pennies per pip.

Cap losses / No cap on winnings

Absolutely. Assuming you don't get slipped, you could have a maximum 10 point loss and a potential gain of hundreds, thousand, etc of points, for example. You can cap your potential gains by setting a take profit order.

Vary Stop Losses

In the real market, you can place your stop wherever you want, but some SB companies do set minimum distances. From memory, IG made you use a minimum stop of 2 pts on their version of the mini S&P for example. You'll have to ask each one individually, they probably all have a different policy.

Lose More Than Your Account

Yes, you absolutely can. The only way round this is to use guaranteed stop losses (these obviously don't exist in the real market) than some SBs offer. But be aware, they often charge a massive spread for the privilege.

You shouldn't have too much trouble if you trade small and appropriately for the size of your account.

One final thing - Pboyles is right. There are umpteen little ways the SBs can shave you. You can use them to learn, but if you want to get serious or use any kind of serious money, I would get used to the idea of moving elsewhere.
 
The Leopard said:
Assuming you don't get slipped,
Click to expand...

What leopard is referring to there is that sometimes when the price goes against you and you want to cancel your bet, it may not cancel as quick as you would like thus incurring greater losses, known as slippage, also watch out for market gap's, e.g where the price opens way below your stop loss after the weekend, you will be liable for losses to the opening price unless you have a "guaranteed stop loss"
 
Thanks for all the info, much appreciated. I have traded in shares in the past but as I only trade in relatively small amounts they are quite long term (the commissions mean it isn't worth me doing short term trades because of the amounts involved). Will continue with the demo account for a while longer before risking it!
 
GKFX do spreadbetting (used to be known as smartlive markets) and you can bet at 10 pence per point for as long as you want. They use the mt4 platform so you can set/modify stoploss, trailing stops etc at any time. The charts are good and as its mt4 you can download lots of additional indicators to use (beginners love that bit). You can spreadbet fx, commoditities,index or equities so you get a full range of markets. They also do demo accounts.

This isnt an endorsment btw. I find Capital spreads have much bettter execution and lower margin requirments but you did ask.
 
Lose more than account size -

Possible but should only occur if there is a significant opening gap against your trade's selected direction at the start of a session. The SB company will close the position asap after the session opens but may be unable to close at your (unguaranteed) stop. This could mean that all your account goes plus more. This is obviously possible with any instrument you might select from their products on offer but is somewhat less likely on indices or large cap shares, and much more likely on small caps. Also, it should not happen on markets that have 24hr trading (via your SB company) as their system should track prices and react immediately your stop is reached - effectively, there are no gaps - so you could look at forex, index futures etc. but beware if the company has a closed session from Friday night to Sunday night - that could generate an opening price gap on Sunday night.

During trading sessions, the company will also be monitoring your margin, i.e. the amount of uncommitted cash in your account. If this falls below their set % limit as your trade goes into the red, even if there is still some uncommitted reserve cash you can find that they will either contact you to top up the account with an additional margin payment or may even cut the position on their own initiative. This should leave your account in place but possibly virtually empty so you effectively can't trade from it until you put more cash in. As well as requesting more margin, they would also cancel any pending new position orders, as this would only worsen the margin cover if they were triggered.

SB companies aren't criminals but they aren't charities, they have to make a profit. We the customers pay some of that profit. But there's nothing radically new in that.
 
Spreadbetting had in its early years, and I stress early years a bad reputation, owing to many dodgy practices, which occurred most usually when persons were winning consistently. I greatly suspect that those few who linger on this forum and always leap to say how bad, untrustworthy etc., spread bet companies are, would be those who opened an account during spread betting's 'dark ages'. And, in all fairness, they (people like pboyles et al) have every right to warn people based on their experiences. My experiences echoed those of the diehard spread bet 'objectors' (for want of a better term), in the early years, however, unlike most, I did not give up on spread-betting per se(despite my having to switch accounts when badness abounded) and have gladly lived to see a 'renaissance' of sorts develop in the spreadbet industry in recent years. Having said that, there is one company that I would not recommend to this day, but as I've not had an active account with them for several years now, I would prefer not to name & shame it, just in case that beast hasn't just changed its spots...

I must reiterate that I have most definitely experienced the great, and most welcome, changes in the industry over the past decade. And from my experience, it is no longer fair to say that the majority of leading spread-bet companies nowadays, are operating unfairly in any way. Post the Worldspreads scandal, all other spread bet companies have now to try harder to convince customers that they are reputable, and most will act as fairly as possible - wary not only of increased competition, but also of adverse publicity being spread across the internet. The main couple I have been using have been honest in every way possible; & most particularly so once the dark ages ended. That is, when I have lost at any point in recent years, it was because of my mistakes and nothing to do with any spread bet company's unfair play. I've been treated, I must hastily add, just as fairly when fortune's smiled.

That all being said, 1 pence per point is almost the same as paper trading, and because, with no disrespect, there is so little money to be made offering any service at 1 pence per point, you will find that no company will offer that as a minimum bet for any significant period of time. Nonetheless, a company such as Finspreads offer bets for 10 pence per point for approximately the first 2 months of trading with them. And you may wish to give them a try. I cannot personally vouch for Finspreads, though, as I use other spread bet companies. However, given how little recent criticism there has been of them on these boards, I would be extremely surprised if you will have problems with their service, should you choose to open an account with them.

I would just like to add, if you'll betting 10 pence per point, in my opinion, you might consider opening an account with at least 100 pounds in it, just so that you should be able to give your self a fair chance of profiting, while covering any adverse movements in the markets.

The Leopard has done a good job with most of your other queries.
 
spreadbet companies will be as bad as we let them get away with .......so always post there at T2W regarding issues

capitalism rules !

N
 
I think Peakoil posted a very good and balanced post, and give a correct picture of the SB industry in the recent years.

There are risk involved trading with market makers (as there are trading the real market) but these can be included in the risk profile. Be sure to learn about proper money management, meaning, not taking too much of a risk in reference to your capital. Don't demo trade too long, if will only hurt you when start trading with real money on the table. Finspread is not a very good place to start. This because of the risk involved not being able to set you own predefine user stop loss in points (at least to my knowledge they have not as far included this feature). If I am not mistaken Capitalspreads can offer you account in different currencies, thus you being able to reduce your entry stake.

Good luck, and as pointed out, a good start is trading with proper money management.
 
open your self an ig index account there you can play at 10p pip for the first month ring them up and ask them to extend to learn level and they will no problem you can probly do that for 3 or 4 months they have good veriety of markets to play with but you will lose your money in the first year or so they won t allow yo to play large spreads with insufficient funds so don t worry about if your trade is going wild they will cancel the trade at the same level as your funds and take your money
be prepared to waste a few thousand at this before you even get near to anything that could possible give you a return read books learn charts , technical analasis and so on you will not stop learning
when you have lost enough money you will go from sbet companies to direct account and if you have nt learnt enough then will be the time to sit back and learn before you play the game or you ll end up in the ****e
 
@ Kate7777
Just in case you don't know, here's a very simple explanation of spread betting.

1. Most of the prices on spread bet platforms are quoted in pence or points.

2. For shares £1 per point buys you the same Risk as 100 shares. ie. one hundred times the quoted price in pence. Risk could also be called equity.
It's always 100 shares regardless of price so your £1 can buy either a tiny position of real cheap shares or a huge position of expensive shares.

3. Much the same idea with indices or forex, £1 per point buys the quoted price in pence but with a £ sign in front
Indices and forex have quoted prices in the thousands or tens of thousands so your £1 per point is buying a huge amount of Risk/Equity.

4. Margin is the minimum chunk of money you need to put on the table to open your position. It's expressed as a percentage of the total Risk / Equity of your position.

5. As the price moves for or against you, each point movement makes or loses you £1.

6. Spread betting is based is very simple maths, it's a multiplication game ;)
 
Last edited:
To start spread betting the financial markets, it is worthwhile reminding ourselves of the basics of share trading:

We should expect that a stock will either rise or fall in value

Shares are bought in the expectation they will rise in value so they can be sold at a profit. This is known as "going long"

Shares are sold on the fall, or expectation of a fall, in the value of a share in order to minimise loss.
 
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