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Beginners Guide to Spread Betting New to Spread Betting? The Spread Betting Trading Centre has compiled the following guide
to explain how Spread Betting works Trading on a Margin With Spread Betting, instead of funding the entire cost of the total number of shares, a trader provides the spread betting company with either a deposit which is used as a ‘margin’ for the bet, or proof of funds so a credit account can be given, which is again used as a margin for the bet. Having a margin means a small amount of money can ‘control’ a larger amount of shares than if the trader were buying or selling through a traditional stock broker. As he is going beyond normal financial means, the trader takes a risk because it is easy to spend money he does not have. Spread Betting companies sometimes trade on the live markets as well. They trade on larger spreads so that the market will move more. This means that they can increase the spreads they offer to their traders, thus protecting themselves against too large a pay out. |
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