How to choose a spread betting company (Part Two)

In the first part of this article, we discussed a few separate questions to ask yourself when choosing a company with whom to place your first spread bet or even when you consider moving spread betting companies once you are an established spread better.

Naturally, cost is an important factor and a tight bid-offer spread ensures you stand to make the most profit but there are a couple more things to consider in the cost and profit department and we cover this in a little more detail here.

Financial requirements – spread trading companies will usually need you to deposit some money with them in order to open a position; however, that amount will vary widely and can also change. For instance, when the credit crunch hit, some spread betting firms increased their margins quickly whilst others were much slower to react.  A high deposit can mean you are overleveraged.

Guaranteed stop losses – we have discussed stop losses many times as it is such a useful tool to ensure you limit your loss and know the level of risk you are exposing yourself to with each trade. Yet, not all spread betting companies offer this and many charge a fee for the privilege as it limits their profits too. This could be as a flat rate or percentage and depending on the size of the trades you are running, could make a large difference to your profits.