Trading FAQs

Your questions answered. If you have a specific question about the workings of spread betting, use this section to find the answer…

Practice spread betting by opening a spread trading account with our recommended spread betting brokers, Pepperstone or Trade Nation. Trade Sensibly. Please note that between 74-89% of retail investor accounts lose money when trading CFDs, forex, and spread betting.

What is spread betting? Is it gambling?

But I don’t want to gamble! I want to trade the stock market…

How does spread betting works?

What do I need to get started?

What is Leverage?

What is Margin?

How is Margin calculated?

What is ‘Going Long’ and ‘Going Short’?

What is the Bid-Ask Spread and how is it Determined?

What is Market-Making?

What are the advantages of spread betting?

But isn’t it too risky? What are the risks?

Can I extend the life of my bet?

Can I choose to close only part of a live position?

Rolling contracts? Futures? What types of spreadbets are available?

But which ones to use: Daily Rolling Contracts or Futures?

Tell me more about spread betting futures…

How much can you bet and how do you decide what to trade?

What about spread trading with dummy funds?

Is spread betting for long-term traders?

I have some spread trades running, would you consider closing them out at the end of today or carrying them over the break?

Why is interest charged on rolling long positions?

How is financing calculated for forex and shares positions?

Who determines the price I see on my spread betting screen? Is it synchronized with the exchange?

How are Quarterly Share prices calculated?

How are the Rolling Daily Cash Index prices calculated?

Why is the future price of the FTSE different from the current price?

Is trading tax free in the UK?

I keep wondering if they’ll close the tax free loophole some day?

Is spread betting tax free if its your sole source of income?

Can it be considered an investment, or is it pure gambling; you win some, you lose the lot?

I’ve heard spread betting owes its origins to those dealer types in London who’d bet on two flies…

But isn’t it all a scam?

Spread betting – particularly shorting – is legalised theft…

I’ve actually thought it is illegal to trade this way?

But I’ve heard that some spread betting operators play underhand tricks to get the upper hand?

What kind of investors or traders do you think should consider spread betting, and what sort of people should stay away?

What are the costs and trading fees?

Could you provide a formula to use so that I can see how much I’ll be down the second I’ve placed a bet?

Why not CFDs? CFDs are used by most hedge funds…

Comparing spread betting to shares trading – are there any advantages using one over the other?

£10 per point is exposure to 1000 shares not £1000 is it not?

What about the dividends that you will go without?

So, I’ve got £200 per annum to invest. In what?

Trade sizing and risk management – what’s that?

£125pp with £5k made me £900 within minutes on the FTSE100 this morning.

How much money is likely to be needed to be worthwhile?

Is it possible to double your money with spread betting?

Which markets would you suggest a new spread trader start with?

Does oil trade 24 hours?

Ok, I’ve got £1000 available to risk. Any tips?

The gambler in me would try and win that 1500 back but I am not going to…

Do you set yourself an earning target for each week/month?

I’ve heard I can still make money on a stock if I take a long and short position simultaneously in two related shares?

Can you bet both ways on the same stock or index?

Is it okay to use ex-dividend dates as an indication for shorting shares?

How do you select stocks, what makes you pick a stock to research in the first place?

What affects share prices?

What is technical analysis?

What about penny and AIM stocks – can you spread bet on these?

Is there any charting software that you recommend? Metastock, eSignal, ShareScope?

Do you just trawl through shares looking for patterns or are there computer programs that help with this?

What about data sources – where to find reliable realtime stock data that doesn’t cost too much?

What fundamental research can one do (if any) to facilitate a successful strategy?

What is a trading strategy?

Everyone talks about developing and back testing your own strategies, but no one tells you how and where to go about it…

Mechanical trading systems; what’s that?

How can I compare a Price Earnings or chart performance of a stock versus the sector that a company is in?

But how do you decide on a stock market direction?

How do you know when you are right and not just luck?

Do you know where I can place daily bets on the FTSE closing up or down?

What is the difference between FTSE 100 daily and FTSE daily future? Aren’t they quite the same?

What stake sizes do people put on when spread betting the FTSE?

Is there any reason why someone would trade forex in the UK instead of spreadbetting?

So I’m using a spread betting company, and they are the market-maker right?

Why do spreads sometimes widen or tighten?

What is a stop loss?

Why should you be wary of auto-stop loss orders?

What’s the difference between a normal stop loss order and a guaranteed one?

What is a limit order?

What’s the difference between a trade and an order?

What is an ‘If Done Order’?

What is an OCO order?

What is a trailing stop?

But what is slippage?

What is market gapping?

But how do you decide on a stop loss level?

Tell me more about the strategy of entering and exiting positions in tranches?

I was stopped on my FTSE short at 08:56am, my stop was at 6050, but according to IG index’s graph the price at that point was 6047?

Why is it more risky trading in stocks with low market capitalisations than large caps?

What is a margin call?

What happens if a company I have a position on is suspended?

But how do providers make money? Do they hedge or are they betting against clients?

I’ve heard that some providers spike data to take out stops on unhedged positions?

I need a spread betting broker that is honest and open with clients trading…

I’ve noticed that the OHLC prices quoted by spread bet firms differ from other market sources.

I am being a bit thick, I think, but what if most of IG Index’s clients do well in one year?

What is Mifid?

What makes plumbers/taxi-drivers/retired soldiers think they can trade Forex or cocoa on a leveraged basis?

How much time a day should one give to trading, is it possible to do in a smaller way alongside a conventional 9-5 job?

What do you think about free trading seminars that claim to coach you to trade in a couple of days?

What kind of profit % should a good strategy give on your capital?

I heard that in a week, from a book, someone narrated a strategy for turning £9,000 into £1,500,000…

Is it possible to make big money spread trading?

Why do so many spread betters lose money?

If you start winning, you are an unprofitable client. How prevalent are the stories of winners’ accounts being closed?

What is this phone only trading?

After-hours trading?

Is it possible to make a living spread betting without having any other sources of income?

But is spread betting only available in the UK and Ireland?

What is the Role of the FCA?

But how safe are client funds?