WHAT’S Margined Trading With Spread Betting?

Have you been thinking about all of the talk of margined trading with spread betting? Do you wish to know more about what it really is? Margined trading is actually where in fact the investor will borrow funds from the broker. The investor will put down money and be able to buy two times the volume of the cash down. That is called the margin. Remember that margined trading is very risky.
How does margined trading use financial spread betting? Basically your margin is really a deposit that you make in order to cover potential losses when you are making your bet. Different companies will demand different margin sizes when spread betting and the amount will depend on the total amount that you bet – the larger your bet, the bigger your potential losses so the larger your margin. This serves to safeguard the company with whom you’re placing your bet, together with ensuring that you enter a bet with the right mind-frame – you are not just risking the number of your ‘buy’, however the entire level of your margin if you lose your bet.
With margined trading the margin is calculated in line with the value of the bet and the percentage margin required by the spread betting company. To be able to work out your margin you take the quoted share price in pennies, multiply it by your bet amount in pounds and multiply it by your company’s percentage margin requirements. The margin is typically very large in comparison to the size of your bet when spread betting which means this is not an investment for all those with very little cash.
On the other hand, you are only paying a small percentage of the value of the bet that allows one to create great leverage and potentially create a bundle from little confirmed capital outlay. If your spread betting is not going too well then you might find yourself getting a ‘margin call’. In margined trading, a margin call is when your margin is beginning to look insufficient to cover your losses. In this instance you will be faced with the option to either add more funds to your account, or close your position – if you wait too much time the company will be forced to close it for you personally.
When you consider a bet, if you can negotiate a “stop loss” as low as possible then it may well help you. Using only a small amount margin as possible is also a smart step. The key principle with spread betting would be to maximize your successes and minimize your losses, if possible, concurrently. Usually this will involve a careful analysis of both, taking into account the risk/reward ratio of your particular bet. Without this level of thought, financial spread betting is really a sure fire way to lose money rather than make it.

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