Financial Spread Betting When Compared To Stock Market Trading
Financial Spread Betting When Compared To Stock Market Trading
You are into financial spread betting due to the various advantages it offers over conventional stock trading. Therefore, it is in your interest to ensure you look possible opportunities to reduce costs to ensure that every transaction you make gives you the best return possible. Considering that the amount of trades is generally more frequent in this type of trading, even small savings can mean a great deal over time.
You must therefore choose a business that allows you tight spread. Broader spreads would erode your profits. Realizing that they're losing clients, some margined trading companies have cut down on their spread and the hope is that customers would get such news from other companies on other instruments as well.
It's worth noting here that a small spread does not necessarily mean a trade that is cheaper. You have to consider slippage, the likelihood of a re-quote along with other complaints. Similarly, the margin amount you need to pay with different spread betting companies would be different and you could negotiate for something that's convenient to you. Some companies increase the margins depending on the market volatility and that's not something you can always continue to. Hence compare financial spread betting companies based with their policy on margins.
Another factor is that of stop losses. The stop loss functionality would ensure that you do not shed more pounds money due to a trade going wrong. However not every spread betting companies offer this facility for free and do charge a fee. This could be in the form of a percentage or a flat sum. Some companies offer this facility just for major markets. Policies about this do differ and that's one other reason why you should get it clarified prior to signing up with a company.
Though spread betting has been seen as a complete gambling instrument, it really is not. It is just another type of trading and people who hold positions over a period of a few days cannot be considered simple speculators because they often often hedge their positions adequately. It is mainly the intra-day scalpers who can be put within the bracket of speculators and even a one or two point movement on the stock could be beneficial for them.
Last but not minimal, despite comparing the different offers of companies, you have to sign the agreement only after checking for any fine print.