In financial spread betting there are many different styles of bets. It is important that you understand each one and I will be doing a post on these shortly.
Now you need to ensure that the account offers the style of bet you want. If they don’t then obviously you need to look elsewhere.
As I mentioned earlier, the increased number of different financial spread betting companies means that they are offering a greater variety of products these days for you to chose from so I hope that it won’t be a problem for you.
Different levels of accounts
You will often find that a spread trading firm will offer a range of accounts. Sometimes I get a little confused by which one will be suitable for my needs!
The determining factor is usually the level of experience that you have. The golden rule is that if they are offering credit then they are for the more experienced trader.
If you in anyway confused about which one to choose then give the company a call and ask them. This is another great way to test their customer service.
Minimum capital requirements
These days they are generally quite low. You do have financial spread betting brokers that do have higher minimum thresholds.
I remember using a practice account when I first started out, it was ok and decided that I wanted to open my first actual account with them. The problem was they had a high minimum capital requirement to get going so I decided to walk away and go elsewhere.
One way of getting around this is putting some money into the account that you don’t want to use for trading. You then need to be thoughtful of the opportunity cost of it just sitting there doing nothing.
Minimum bet size
This will be extremely important to those of you who are just starting out. It is important because the size of your bet will determine the amount of money that you are risking.
This was definitely one of the most important of all the criteria for me when I started out. I am quite patient and disciplined so I wanted my bets to be small when I started.
Again the competition amongst brokers has meant that the minimum bet sizes have fallen. This is great news and I expect (hope) they will continue to fall in the future.
Margin requirements
As you should already know, when you are Financial Spread Betting you are dealing with leveraged products. You need to know the margin requirements so you know how much exposure you have and avoid being subject to any margin calls.
Additional account functionality
What other functions do you need to trade? Stop losses? Do you want these guaranteed? How much does that cost? Can you set up contingent orders?
Write down each function that you want the account to offer and tick each one off as you check out each account.
How good is the trading software?
Now I understand that you are likely to have your own software for analysis but you will still need to use their software to actually make the trades.
It is vital that you can use it and that it is both reliable and quick. The last thing you want is to press the trade button and for it to hang there for ages, worse still…crash.
This is hard to check with dummy accounts as they often run off different systems to the live accounts. Again you can ask in forums for other traders’ opinions on financial spread betting firms’ trading platforms.
Do they accept trades over the phone?
This is something you need to consider as a contingency. What if something prevents you from placing your trade online? Will your broker let you call a trade through and how much does that cost?
An extra tip: Always keep the number of you financial spread betting firm in your mobile. You never know when you might need to call them.
Extra support
It would be nice if by signing up to an account that you could get access to additional support. See if they have training or seminars that they offer. This isn’t essential and you need to be careful of any sales pitches but would be a nice extra.
Account opening incentives
You will find these days that you are bombarded with offers to open an account. Offers can include cashback, tighter spreads for a limited time or even wine and champagne!
Now this shouldn’t be a criterion for opening an account for the long term but why not take advantage of that with a second account?
Now you need to ensure that the account offers the style of bet you want. If they don’t then obviously you need to look elsewhere.
As I mentioned earlier, the increased number of different financial spread betting companies means that they are offering a greater variety of products these days for you to chose from so I hope that it won’t be a problem for you.
Different levels of accounts
You will often find that a spread trading firm will offer a range of accounts. Sometimes I get a little confused by which one will be suitable for my needs!
The determining factor is usually the level of experience that you have. The golden rule is that if they are offering credit then they are for the more experienced trader.
If you in anyway confused about which one to choose then give the company a call and ask them. This is another great way to test their customer service.
Minimum capital requirements
These days they are generally quite low. You do have financial spread betting brokers that do have higher minimum thresholds.
I remember using a practice account when I first started out, it was ok and decided that I wanted to open my first actual account with them. The problem was they had a high minimum capital requirement to get going so I decided to walk away and go elsewhere.
One way of getting around this is putting some money into the account that you don’t want to use for trading. You then need to be thoughtful of the opportunity cost of it just sitting there doing nothing.
Minimum bet size
This will be extremely important to those of you who are just starting out. It is important because the size of your bet will determine the amount of money that you are risking.
This was definitely one of the most important of all the criteria for me when I started out. I am quite patient and disciplined so I wanted my bets to be small when I started.
Again the competition amongst brokers has meant that the minimum bet sizes have fallen. This is great news and I expect (hope) they will continue to fall in the future.
Margin requirements
As you should already know, when you are Financial Spread Betting you are dealing with leveraged products. You need to know the margin requirements so you know how much exposure you have and avoid being subject to any margin calls.
Additional account functionality
What other functions do you need to trade? Stop losses? Do you want these guaranteed? How much does that cost? Can you set up contingent orders?
Write down each function that you want the account to offer and tick each one off as you check out each account.
How good is the trading software?
Now I understand that you are likely to have your own software for analysis but you will still need to use their software to actually make the trades.
It is vital that you can use it and that it is both reliable and quick. The last thing you want is to press the trade button and for it to hang there for ages, worse still…crash.
This is hard to check with dummy accounts as they often run off different systems to the live accounts. Again you can ask in forums for other traders’ opinions on financial spread betting firms’ trading platforms.
Do they accept trades over the phone?
This is something you need to consider as a contingency. What if something prevents you from placing your trade online? Will your broker let you call a trade through and how much does that cost?
An extra tip: Always keep the number of you financial spread betting firm in your mobile. You never know when you might need to call them.
Extra support
It would be nice if by signing up to an account that you could get access to additional support. See if they have training or seminars that they offer. This isn’t essential and you need to be careful of any sales pitches but would be a nice extra.
Account opening incentives
You will find these days that you are bombarded with offers to open an account. Offers can include cashback, tighter spreads for a limited time or even wine and champagne!
Now this shouldn’t be a criterion for opening an account for the long term but why not take advantage of that with a second account?