Three Things To Consider Before Opening A Spread Betting Account.

Financial spread betting is getting more and more exposure in the mainstream press and with that increased exposure comes closer scrutiny. Spread betting is becoming increasingly popular because it is exempt from Capital Gains Tax and allows you to profit from falling and rising markets.

It’s a margined product, which means for a small initial outlay you can achieve leverage of up to 20 times what you originally put down.

While profits can be magnified so too can losses.

Here’s three points to think about before you open a spread betting account.

Get Serious About risk

It’s in the nature of financial markets to be volatile. And while that presents investors with opportunities there are risks involved. It’s important you are sensible about managing risk from the start.

It’s not being over cautious, it’s being sensible. If successful traders, past, present and future ones have one thing in common, they all manage their risk from the word go.  And they keep doing it even when they get more experienced.

Before you place a trade calculate how much you can afford to lose and place a stop or limit at the point where you would exceed this.

Many traders use the two percent rule. This rule says that no one position opened should risk more than two percent of the investors total capital.

For example if you had $100,000 then you would risk only $2000 per trade and so only after an unlikely 50 losses would you lose your capital.   

It’s also a good idea to place stops and limits on your trades. If you place a guaranteed stop, your trade will be guaranteed to stop at that point, even if the market suddenly moves against you.

Platform and Provider.

Choose an established spread betting provider, one that has been around for a while and is successful. If you’re new to financial spread betting choose one that will provide educational resources to help you get started in the right way.

And, going forward, choose one who provides ongoing support to help you improve your trading skills.

When spread betting online, it’s important you choose a reliable and secure trading platform. Take a look at financial blogs and see what industry professionals are recommending. {And do your research online, what do experienced spread bettors recommend?And look out for awards given out by industry magazines}.

Margin and Spreads.

Spread betting online might be relatively tax free but there are costs involved. Compare competitor websites and look for the most competitive margins and spreads.

Choose a financial market to spread bet on and then choose the provider who gives the best deal on it.Don’t forget to consider all the angles though when looking for a financial spread betting provider.

A recent report by research organisation Investment Trends suggests that the company with the most spread betting accounts in the UK is IG Index.

IG Index offers both free education and expert analysis to those who are new to financial spread betting and those with more experience of it.

Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.