Choosing a Spread Betting Account

Spread Betting can be an equally complex and risky business. Whilst the potential rewards can be huge so can the losses and, given the huge range of markets and financial instruments you can bet on, it's vital to know you're with the spread betting firm that's right for you.

Whilst finding a tight spread is often at the forefront of traders' minds when looking at what a firm will be able to offer them, the range of things to take into consideration goes far beyond spreads. Here are a few of the top things to think about;

Markets

Whilst most firms will be able to offer you a wide range of markets, it's always worth ensuring that you will actually be able to access the markets you are particularly interested in, or feel you will do well on. If you are interested in a number of markets you should take time to consider which you will bet on most often as, depending on how volatile they are, different products will be priced differently. Perhaps a firm can offer you a great spread on commodities but is less competitive on indices? The most important thing is to have access to the markets you want to focus on.

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

Guaranteed Stop Losses

You'll want to be clear on the policies of any firm you think of choosing an account with, especially in regards to how and when you can apply an automatic or guaranteed stop loss. One of the main attractions of spread betting is that, with a large enough bet, huge amounts can be gained from relatively small movements in the financial market. This also means loses can be big. Minimising risk is essential and stop losses are the cheapest way of achieving this end.

Minimum Bet and Account Size

The minimum size of bets taht you are allowed to make varies a lot between different accounts. Some accounts will allow you to make bets as small as £0.50 per point. Finding such an account is a good idea if you are new to spread betting. It is common to find that firms offering the best spreads also demand a higher minimum bet and a larger minimum account size, sometimes in the area of £500. Whilst a tight spread is attractive, you shouldn't bet more than you can afford to risk, especially as markets can move very quickly.

Margin

The margin is the measure of your exposure in a certain market i.e. the amount of money you have in an open position that could potentially be lost. You will normally need to have between 10% to 25% of this amount in your account as collateral in order to bet. This varies between products and firms and will have a large bearing on how much capital you will need in order to make the bets you are interested in.

Technology

Understanding the bets you are making is not always straight forward and analysing the markets you are interested in can be harder still. Many firms offer incredibly advanced trading platforms for your use. It's definitely worth considering how good the firm's platform is as, especially if it is very basic, you're more likely to spend money on additional trading tools.

Some firms allow you to 'test drive' their platforms before you make a decision. This comes highly recommended as you'll want to know exactly what your getting.

Introductory Offer

There are some very tempting introductory deals out there, some of which offer cash bonuses or coverage of net loses over a certain period of time. Be sure to make the most of such deals, but don't forget to consider the accounts other features.

Multiple Accounts

Finally, it is advisable to have more than one account. Even if you do find the account that's perfect for you, spreads are subject to change and can tighten or loosen in response to events on the market. If this happens it's great to have another account with a better spread already at your disposal.