SPREAD BETTING FAQs
InterTrader will answer all your questions on spread betting. Here you’ll find all the spread betting info you need to start trading with us. Learn what types of spread betting account we have, which trading markets are available, and how margin trading works.
Spread Betting FAQs
Margin trading involves the use of leveraged position sizes where relatively small amounts of money can be used to fund much larger positions. For example, a trade using 10:1 leverage would enable a trader with £10 to open a position size valued at £100. In this case, the extra £90 is borrowed from the spread betting provider to enable the trader to maximise potential gains (or losses, if the position does not work as anticipated).
Providers typically make margin requirements forcing traders to have a certain amount of money available in the trading account (generally anywhere from 0.5% to 10% of the total trade size) to keep the margin trade open and active. You should remember that, while margin trading can allow traders to maximise gains through larger position sizes, losses can be equally enhanced and you will be responsible for these losses if the trade moves adversely.
Stop-losses are a vital tool that beginning traders should always remember to use. A stop-loss allows a trader to limit potential losses by placing an order to close a trade automatically at a certain level if prices move in an unanticipated direction. If, for example, you are only willing to lose £100 on a given trade, you can set your stops to close the trade if that amount is reached. Stops can also be set in terms of point values or percentage movements in trades that do not proceed as initially forecast.
Note that stop-loss orders are not guaranteed so you may not be filled at your requested level, for instance if the market ‘gaps’ suddenly. Stop-losses may be subject to slippage in fast-moving markets.
Spread betting providers can provide traders with tens of thousands of different trading instruments, in a variety of different asset classes. These markets fall into the following categories:
- Equities (shares)
- Stock indices
- Interest rates
Some of the spread betting terms you will encounter include: trade entries, stop-losses and profit targets.