Opening your Spread Betting Account

Before you begin to open your account, make sure that you understand and have used the system with real prices. Spread betting providers are better than equity and futures brokers at providing free ‘training’ or ‘simulator’ accounts, which can be more or less realistic (some fill all your orders immediately with no slippage, which is unrealistic), but at least you’re learning some useful things without losing real money.

Before opening a live account make sure you know the six core basics of how to:

  • View a chart
  • Place a market order
  • Place a stop order
  • Locate your trading instruments
  • Place a limit order
  • Navigate around the platform

For new spread traders it is particularly important they familiarise themselves with the trading platform and get a feel for the methodology of buying, selling and adding stop-loss and take profit orders. Also, some some markets can be very volatile (i.e. move very quickly) and opening a demo account will give you a feel for how different markets move allowing you to gain confidence in dealing with fast-moving markets. And then, if you can’t make money consistently with a simulator, what’s the point of trading with real money?

Having said that, beware, however, that demo or paper trading can’t replace real trading simply because psychology can’t be replicated when paper trading. The psychology element is especially relevant and is a significant component of a successful trader. As City Index’s Raymond advises ‘novice investors would do well to start with a lower stake instead of using a practice account because trading real money (no matter how small the increments) affects consumer behaviour’. He says: ‘I see the value of a demo account as minimal. A lot of clients use a demo spread betting account but because they have fictional funds, they trade fictionally too. It can be hard to get into a live trading environment as if you were dealing with real funds.’ Simple example to illustrate; When you sell at a loss whilst paper trading you don’t think twice whereas when you do it in real life, that can affect the next decision you make to buy or sell another share.

In any case I have provided below a couple of places where you can open virtual accounts to begin playing/trading with. Two which I particularly like are:

Ayondo: a good spread betting firm with general tight spreads. Very simple trading platform, good for testing and becoming familiar with the levers and throttles. I don’t rely too much on their charting tools (for my purposes) but you don’t have to use them.

InterTrader: this is a also a good spread betting broker with tight spreads and offers a USD10,000 demo account (or currency equivalent) As with many recently designed trading platforms, the software is maybe a bit more user friendly than some of its older competitors.

You can use these demo accounts to perfect your skills before you start risking any real money. When you are confident and want to trade for real, I would suggest you begin with opening an account with the broker on our spread betting comparison page, I have worked with them and still do. Opening an account is easy but does take time. You have to prove that you are who you say you are by providing copies of your passport, bank statement and utility bills, along with your deposit that can be paid preferably by debit/credit card. It’s much like when you open a bank account. They need to be positive that you’re not some kind of drugs lord laundering money. The application forms are quite easy to fill in and once you have the above information it takes on average, from experience, about 3 weeks to open an account.

Spread Betting Beginner: “I think a lot of the 80% of day traders and investors lose because they do not take the time to learn how to trade and maybe want instant gratification. I also think that until you put real money on the line your learning will not reach its full potential. I have learnt loads since the beginning of January when I set out on my 6 month quest to see if I can make it work by actually trading and not just watching.”

Opening a Spread Betting Account:

  1. Apply for an account. You can do this at any time by filling the application form through the provider’s site.
  2. Account Confirmation: Once your online application has been processed and approved, you will receive an e-mail.
  3. Fund Your Account: Your first deposit can be as little as £100 although we recommend a starting balance of at least £2000 or more.
  4. Start Spread Betting: You can now deal using the browser-based online trading platform. Just log in, and browse to the market you wish to deal in.

Depending on who you are trading with, you are sometimes assigned an Account Manager. Either way, your account manager or someone from the spread betting company will call you to confirm your details. Once this is done they will send you a confirmation letter along with a trading card, Internet details and passwords, so you can trade on and off line.

Some spread betting companies have a facility to open a credit account. DON’T! You are using money that isn’t yours and this leads you into a false sense of security. Much like when we use credit cards, we don’t see it as our money and it isn’t, we just pay through the nose for the privilege. We compare key spread betting providers here.

Deposit with a Spread Betting Provider

When you open an account with a spread betting company, you have to have money held with them to trade. This deposit is used to cover any trades you make.

Each trade you decide to make is insured so to speak against your available deposit. Therefore, should you have a deposit of £100, you could trade up to the value of your deposit.

Your trade is multiplied by the amount you are trading by an amount, which is either fixed or based on the value of the share traded.

For example:

10p Trade on a share of £1.50

Could be worked out as

10p x 1.50 x 100 = £15

This £15 will be taken from your deposit as security.

The size and type of Indices/Share you’re trading will determine the deposit that is required to cover that trade.

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