Knowing the spread betting lingo

When it comes to spread betting, you need to know the essential lingo before you begin. To understand the concept of spread betting fully, below is a list the words most commonly used when spread betting.

A margin – This is when you make a financial spread bet, but you do not have to pay cash up-front to cover your whole exposure. Typically, the bookmakers will often ask for an initial margin of just 10% to 20% of the value of the item that you are spread betting on.

A stop-loss - This is put in place to prevent losses on a bet exceeding a certain amount. Spread betting traders can arrange a 'guaranteed stop' with their bookmaker so that losses cannot go beyond the limit that they have set thus limiting the amount of money that they have lost.

A close out – This enables the trader to have the ability to shut down a spread bet before its expiry date. The closing level will be the bottom of the new spread (for an 'up-bet') or the top of the new spread (for a 'down-bet'). For example, if you have bet on a football match and you are making profit on your spread bet before the match as ended you can choose to ‘close out’ your bet so that if the situation in the football match changes you won’t lose any money.