Spread Betting with Lowest Margins

Spread Betting with the Lowest Margin Requirements

Spread betting with the lowest margin requirements allows you to make larger trades with a smaller deposit amount.  The ability to leverage or “gear” your finances in order to make bigger trades is one of the biggest advantages that spread betting companies offer customers.  You can learn more about what “margin requirements” are here: http://www.cityindex.co.uk/margin-and-leverage.aspx

This page provides information on which spread betting companies provide the lowest margins in addition to more information about what margin requirements mean for you below.

Spread Betting with the Lowest Margins (from 1%) at City Index

City Index is well known as one of the oldest and largest spread betting firms and offers the lowest margin requirements for customers.  If you’re looking for the spread betting platform with the lowest margin requirements than you should open an account here.

City Index was launched in 1983 (more than 25 years experience) and offers wafer thin spreads from just 1% on certain markets.

City Index also offers some of the tightest spreads available, with 1 point spreads on four major indices including the UK 100, Wall Street, Germany 30 and France 40.  You can trade on these spreads with City Index on your iPhone, Android or Blackberry devices.

New traders can take sign up to the 2 week City Index Demo which gives you £2,500 in virtual cash to trade on the simulated platform.  This is good for helping beginners learn how to use the platform and learn how to spread bet (including how to use technical tools, stop-losses, monitor your positions and buy/sell).

After you make a deposit at City Index, you’ll also be able to take advantage of exclusive 25p trades across more than 12,000 different markets for the first 4 weeks of trading.  This is part of City Index’s “Learn to Trade” course which offers lower minimum trades  of 25p per point (afterwards this increases to £1 per point) and a range of seminars, video presentations and trading tools.

What are Margin Requirements in Spread Betting?

Spread betting has become massively popular in the UK.  The FSA estimates that there will be around 1 million accounts by the end of 2011, with growth of around 40% per annum.

There huge benefits of spread betting come from the fact that you don’t have to pay capital gains tax or Stamp Duty on any of your trades.  In addition, the ability to leverage your finances and wager on financial markets (including global indices, interest rates, house prices) without having to actual own the financial instruments, makes spread betting more attractive to certain individuals and/or retail investors.

One of the biggest advantages of financial spread betting however is the leverage that individuals can receive from trading platforms.  Every spread betting company will offer you a “margin”, which is the minimum percentage of your trade value that you must have deposited in your account.

In other words, your margin requirement is the minimum amount of cash or equity that you must have in your account (including profit/loss from existing trades) to cover the margin requirements applicable for that trade.

For example, with a margin of 1% (as provided by City Index on certain stocks) you can assume trades with the value of £10,000 with just a £100 initial deposit.

Likewise, if the margin requirement is express as a percentage (e.g. 10%) and you want to buy 1,000 Microsoft shares with a value of £1.60 each, then the margin requirements are (1,000 x 1.60) x 10% = £160.  You’d need a minimum deposit of £160 in your account in order to buy £1,600 worth of Microsoft shares.

As you can see, low margins offered by spread betting firms allow you to leverage your finances or “gear” yourself in order to make larger trades.  Although this massively increases the risks of spread betting since you can lose more than your initial deposit, it also means that you can begin trading with a smaller capital requirement.

The more competitive and lower the margin requirements offered by a broker, the better it is for you. For example, if you see one spread betting platform is offering a margin of 1% and the other offers 3% than the former is better since it allows you to leverage your deposit to make bigger trades.

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