If you are keen on knowing about certain important pieces of information pertaining to spread betting, then you certainly will have reasons to go through this article.
From a layman’s points of view spread betting is a derivative which gives you the opportunity to deal with scores of financial products. It could range from commodities to stocks and also could include currencies and much more. You can use spread bets and forecast movements of the various financial derivatives and make money out of such movements.
However, you should have good knowledge and information about spread betting. There are also some bits of information which you may not be aware of and it would be pertinent to learn more about it over the next few lines.
You can lose money in spread betting. This is perhaps the most important piece of information which many first time entrants may not be aware. Hence you are exposing your money to risk and therefore must know how to manage risks effectively. If you successfully manage the risk then half of the job is done.
You must know the difference between stop and guaranteed stop. Stops are effective in managing ordinary risks but when there are unforeseen happenings in the market-place, opting for guaranteed stop would be a better option. In simple words, guaranteed stops helps you to cover your risks better.
Though you might be aware of spreads you may not be aware of the intricacies involved in it. You might have fixed a buying price and the service provider might buy it at a lower price and the difference is his. The same applies to selling price too. The betting company always is in a better standing as far as spreads are concerned.
Not many new entrants would know that there are different types of spread betting. It could include dialing spread betting, short term, medium term and long term spread betting. Each one has its unique risks and you should know how to manage it.
Dealing in conventional share buying and selling is not the same as spread betting. You must delve deeper into this subject and being in touch with reputed sites like cmc markets can help
Various sporting events also come under the ambit of spread betting and football is one such game.
Understand liquidity is important to have better spreads. This again is not known to many traders. The higher the liquidity of a commodity the better you will be able to manage risks.
You can expect a better spread at the beginning of the trading session in a normal market environment. This again is not known even to many experienced traders. This is particularly true if the volume of traded commodities or share is not very high. Markets often tend to go a bit slow during lunchtime and perhaps this could be a right time to place bets.
There is something known as compulsory stop losses which you must be aware as a trader. If you do not have a stop order in place, there are many service providers who will put in their own compulsory stop loss safeguards to ensure that you are not totally wiped off from the scene.
When it comes to switching on stop losses, different firms use different price ranges. Hence you must be aware of the same.
You must also be aware about order cancellation. Though this happens automatically in many firms, there are a few who do not do it by default. You must be aware of the same.
You must also be fully aware of the dispute resolution mechanism. Though such instances could be few and far between, not knowing the same is not an excuse and as a customer you are supposed to know it fully.
As a customer you are supposed to be aware of your margin requirements. You should not be in a situation where you are asked to put in more margin money. This means that you are not fully in control of your spreads and margins. You are exposing yourself as a trader to higher risk than what you normally can absorb and bear.
Conclusion
These are just a few points pertaining to some important and perhaps unknown facts about spread betting.