Easy-to-Follow Guide to Spread Betting for Beginners

LONDON, May 11, 2012 /PRNewswire/ --

Use the following spread betting guide to build your trading confidence before you take a position on the financial markets.

With a tendency to jump in at the deep end when it comes to trading the financial markets - and what with spread betting offering beginners access to over 12,000 financial markets for only a small initial deposit, it can be easy to get carried away.

Below, we provide a brief overview of what spread betting is and its margin feature.

What is Spread Betting?

Spread betting is the act of taking a position on the future price movement of a market. Traders can speculate through both technical and fundamental analysis as to whether that market's price will rise or fall.

Unlike more traditional forms of trading, spread betting offers traders the potential to profit from a market that not only rises - but also falls.

Therefore, if a trader believes a market's price would fall - they would go short and sell. Therefore, with every fall in that market's price, their profits would rise.

Alternatively, if they were wrong and the market moved against their position - in this case, the market would instead start to rise - they would incur a loss.

What is margin?

As a margined product, spread betting only requires traders to deposit a small percentage of the full value of their position.

Through spread betting provider City Index, the average initial deposit for spread betting a financial market is between 1% and 10%. For example, if you were to take a position on a market trading at £5550 - if the required deposit was 1%, you'd only need to pay £55.50.

As a result, your potential to profit from an initial capital outlay is significantly higher than in traditional trading. But remember, the same can be said for your potential to lose.

Spread Betting with City Index

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

They provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

City Index clients can benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.

SOURCE City Index

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