Spread betting can yield both great rewards and losses alike. Whilst finding a tight spread is often a traders’ priority when assessing what a firm can offer them, the number of things to consider goes far beyond spreads;

Markets

If you are interested in a number of markets, you should take time to think about which you will bet on most frequently, as products will be priced differently according to their volatility.

Perhaps a firm can offer you a great spread on commodities, but when it comes to indices they might be less competitive. The most important thing is to have access to the markets you want make your focus.

Some firms offer one point spreads. The closer you can get to this the lower the risk and, in most cases, you’ll be able to turn a profit quicker.

Margin

The margin is the measure the exposure you have in a certain market. You will normally need to have around 10% to 25% of this amount as collateral in your account before you can bet. This differs between products and firms and will affect how much capital you need in order to make bets.

Minimum Bet and Account Size

The minimum size of bets that you are allowed to make varies a lot between different accounts. Some will allow you to make bets of just £0.50 per point. Finding such an account is a good idea if you are a spread betting novice.

It is common to find that firms offering the best spreads also require higher minimum bet. Whilst a tight spread is attractive, you shouldn’t bet more than you can afford to risk.

Guaranteed Stop Losses

One of the main attractions of spread betting is that, with a large enough bet, huge gains can be made from relatively minor changes in the financial market. On the other hand loses can also be big.

Minimising risk is essential and stop losses are the cheapest way of achieving this end.

Introductory Offers

There are some very tempting introductory deals around, some of which offer cash bonuses or coverage of net loses over a certain period of time. Make the most of such deals, but don’t overlook other features just because an offer is involved.

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Tags: Betting, Spread Betting