Type of Spread Betting Accounts: Standard, Credit and Limited Risk Accounts

There are a number of companies that offer financial spread trading and all you have to do is go onto their website to find out how to open an account. It is very simple and with most companies you can open an account on-line in minutes. It is also made secure by giving you an account number and a password, which you can change.

Some companies will allow credit provided you can prove you have immediate access to cash. As a general rule, you need to show proof of cash that is ten times the credit you are requesting but check with the individual trading company.

The alternative is simply to place some money in your trading account, this is called 'margin' and is explained in more detail later.

Where can you spread bet? Our listings may not be exhaustive but probably represents the most popular ones offering financial spread betting. We only stick to listing FSA regulated companies.

Also, be aware that not all spread trading companies offer a totally comprehensive range of things to trade. One company may offer say, a sector index, but another may not and not all will offer Pork Bellies and Robusta Coffee - but some do. The range of markets you can spread trade is increasing almost every month. If you know what you intend to trade and it is not really mainstream stuff, check to ensure the company takes trades on your market before opening the account. Even markets such as FTSE small cap companies and currencies are not offered by all companies.

Standard Accounts (Deposit Account)

This type of account requires you to deposit funds in your spread betting account prior to commencing trading. This balance will then used to fund your margin requirements when you trade. Profits/losses from your spread trading are added/deducted from this balance. This balance may be referred to as Equity Balance or Cash Balance.

Credit Accounts

This type of account is normally for the more experienced trader. No deposit is required and if you are successful in achieving credit status then you must be aware that you will have a limit and that any losses above this limit must be settled immediately.

I take it you have never opened a spread betting account!?

Companies will normally require evidence of liquid risk capital in a multiple of your requested credit allocation to allow you a credit account...

Limited Risk Deposit Accounts

This type of account is similar to the Standard Account but restricts you to placing trades with a Guaranteed Stop Loss (Controlled Risk Bet). This means that Limited Risk Accounts can only be operated if an instruction to close a trade at a pre-agreed price (i.e. a Guaranteed Stop Loss Order) is specified with each trade placed. In other words, when opening a trade you must specify a stop to cover the maximum possible loss in the account. The stop will be guaranteed by the spread betting company whatever the circumstances. Limited Risk Accounts may only allow access to a limited range of markets and may be subject to a maximum stake or trade size in any given market. Depending on your level of experience and financial situation, you may be steered towards the limited risk account for your own safety. Once you have some experience, you can always request a (free) swap to the other account.

It will take a few days to set everything up, and open your spread betting account. Once everything is complete, you will often be sent Handbooks and/or Dealing Guides along with Account Number and User Name and Password information that you will need to access on-line trading. If you have deposited funds by cheque, you may have to wait an additional day or two for your funds to clear. As a rough guide, you should allow two weeks from sending your application form to being fully prepared to place your first trade.

Opening a spread betting account is similar to opening a bank account. You provide your chosen spread betting company with your personal details such as name, address, contact number, employment and banking details.

Processing your application form can take 24 hours or more so you cannot start trading immediately. Your spread betting company will want to check your credit history (in the case of a credit account) and double check the information you gave them.

Some spread betting firms, however, may allow you to start trading before the verification process. This happens if you are going to use a cash account (i.e. the standard account as opposed to the credit account) or if you are looking at starting with a small amount of capital. e.g. £100

Either way, a one or two day difference is inconsequential compared to other criteria by which you are going to choose your company from.

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