Before that you start financial spread betting you need to open an account. There are so many different types of accounts these days for you to choose from. The great advantage that has arisen for us as a result of all these new accounts is that this increased the level of competition has given us better trading facilities at better prices.
That is great news for us financial spread betters because there are many more products being available, the size of the spreads being reduced, the websites being improved and the level of customer service increasing.
Because there are more accounts sometimes people (especially newbies) feel a bit overwhelmed when it comes to choosing a financial spread betting account.
It is important to remember that the account that you choose doesn’t have to be forever – you are not marrying it! You can always change your mind. With that said though, here are some things you may want to take into account when choosing your account.
Practice accounts
If you are new to financial spread betting then I would recommend that you start off by paper trading. There are many companies who offer this type service.
I would start by putting the actual amount of capital that are going to risk into the dummy account and practice for a while first. Please note that you will encounter many more emotions when you trade for real.
Customer services
Another important factor to me is customer service. When I want Financial Spread Betting Information, I want to call or email the firm and for them to deal with it promptly and competently.
But how can you test this before you open your account? Well phone them up to ask them for their new account literature. As a potential new customer it will be the best they treat anyone so if you aren’t happy with that service then maybe they aren’t the right company for you.
You can also check out different financial spread betting forums and review sites. The problem with forum sites is that often more people complain than compliment. It is probably a good idea to start your own thread asking people to recommend their current financial spread betting firm. Many people will be willing to share this information with you.
Be careful of review sites. Often the reviewer hasn’t used the account but will get a referral fee for referring you. It is good to check that the person recommending the account has actually experienced it firsthand.
Good value
Like anything I want a company that offers great value. As you know in financial spread betting you don’t pay commission. The broker makes their money from the size of the spread. It is useful to compare a few different brokers to compare their spreads. This is way it may be useful to open more than one account (more on this later).
Style of bets
You will need to check either the literature that you requested or the web to ensure that the financial spread betting broker offer the style of bets you want for example (rolling daily bets). If they don’t then they are obviously a no go. With the level of competition these days most offer a variety of products but not all companies off everything you may want.
Ranges of accounts
Some financial spread betting companies offer different types of accounts. This is different to the style of bets mentioned above. Often the style of bets will be the same, it is just the accounts are usually designed for different people.
Who they are designed for depends on the firm but some are usually more for the experienced trader and others for the newbie. Often it is difficult, especially when you are new, to know which is the best account for you. If there is a financial spread betting account offering credit then chances are they are for the more experienced trader.
If you are unsure then give the company a call to ask which is best for your circumstances (another way to test out their customer service!).
Minimum capital requirements
These are generally quite low but when you are starting out the amount of capital that you need to put into your account to begin with can make a difference.
I remember that I quite liked the look of one account when I started as I was using their training/dummy account. I wanted to open an actual trading account but their minimum was more that I wanted to risk at the time.
Often you can get around this rule by putting the money into the account to satisfy the requirement but don’t actually use it. Then you just need to be careful of the minimum bet size…
Minimum bet size
This will be an important criterion when you are starting out in financial spread betting. The bet size determines how much you are risking. It is really important that in the early days you aren’t risking too much.
When I started this was probably my most important criterion. I wanted to risk as little as possible per trade. When I talk about the minimum bet size I am really talking about the stake/bet per point.
The competition has reduced the minimum bet size over the years and it still continues to fall.
Extra functionality of the account
Does the account give you are the extra functions that you desire?
In Financial Spread Betting it is important to have stop losses. Does the account offer automatic stop losses (a must in my opinion)? Does it guarantee stops? If yes, at what price? Can you do contingent orders?
Set the minimum extra requirements you need in your mind beforehand and make sure your account ticks each one off.
What are their margin requirements?
Different accounts often have different margin requirements. As you know, with financial spread betting you trade on a margin, the size of the margin determines your level of leverage and the amount of deposit required.
Can you trade over phone if not able to trade online?
Although most of financial spread betting is done on the internet these days. Sometimes you may be required to telephone an offer through. Does the company allow that? At what cost?
Software
It is important that you can use the software that you get for managing your account. Even if you use separate software to do your analysis, you need the software to actually make your trade to work and work well. In financial spread betting we often have to make quick decisions and need the correct tools to do so.
It is often difficult to test this before opening your account. Dummy or practice accounts often don’t run on the same systems as the live accounts so sometimes this isn’t the best indicator.
As with customer service, you could check out others’ opinions in forums (bearing in mind they are more likely to report negative experiences).
Additional support
Is there any additional support like training? Do they offer courses? Run seminars? Not essential but nice to have.
Free incentives
Accounts often have freebies or cashback to entice you. While you shouldn’t use this as your criterion for you long term account, it may be worth opening an additional account to take advantage of the offer. Sometimes it is nice to open a free bottle of champagne!
More than one account
I mentioned that you might want more than one financial spread betting account. This blog post has gone on longer than I initially planned so more on that next time.
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