Spread Betting
Spread Betting •
Spread Betting is a leveraged financial product. This means that you can take a larger position on the market without having to invest the full capital. Profit or loss is then calculated by multiplying the size of your stake by the number of points the market moves.
Spread Betting with leverage works in a similar way to CFD trading. However, unlike with CFDs, where leverage is determined by trading volume (or lot size), with Spread Betting, leverage is determined by the size of your bet (or stake).
For example, when trading CFDs on Spot Metals with FxPro, the required margin for trading between 0 and 50 lots is 0.5%, providing a maximum leverage of 1:200. In comparison, when Spread Betting on Spot Metals, a margin of 0.5% is required for stake sizes between 0 and 3,000 GBP.
Margin refers to the funds you need to have in your account to place and maintain a Spread Bet. As with the leverage on offer, the amount of margin required to place a Spread Bet depends on the size of your stake and the instrument being traded.
When Spread Betting on margin, you also need to ensure that the equity in your account is sufficient to cover all your open positions. If the market moves against you, or the margin requirements increase (during times of high volatility for example), you may need to deposit additional funds to guarantee your open positions.
For more information on our margin call procedure for Spread Betting, visit our FxPro Edge - Spread Betting FAQ.
As a leveraged financial product, Spread Betting can be profitable, however, it also carries a certain level of risk. Although leverage can help you open larger positions on the market with a smaller initial investment, it can also compound any potential losses, especially in the absence of sound risk management.