To place financial bets you will need to open an account. It is very easy to set up an account with one or more financial betting companies. Simply fill in an application form. They will make a credit check on you (the same as when applying for a credit card or loan) and, as long as you are creditworthy, your account will be opened immediately.
Different financial bookmakers have different kinds of accounts for their clients, and call them by various different names. However, they are essentially:
Deposit Accounts
Deposit accounts are available to almost every would-be client.
With a deposit account you have to pay money into the account before you can begin betting. Or, with some companies, you can pay this on the day you place the bet. Although this is inconvenient to some extent and means that you must have some money before you can make money the advantage is that you cannot normally lose more money than you put on deposit, as the bookmaker won’t permit this to happen. Therefore, if you only deposit money in your deposit account which you can afford to lose you won’t ever get yourself into a difficult situation if you do badly.
The amount of money you need to put into a deposit account depends on the type of bet you want to get involved in. Every type of financial market you can bet on has an official Deposit Factor, set by the financial regulators. Betting on the future price of the London Cocoa market, to give just one example, currently has a deposit factor of 40. So the deposit factor is 40 times the size of the bet you wish to place. If you wish to place £10 bets you will need a £400 deposit. Other markets have smaller and larger deposit factors and your chosen bookmaker will provide you with further information on request.
Margins: Your bookmaker may ask you for additional money, known as a margin or margin account, if prices move against you. You may be expected to provide an extra margin if you are in such a position as you stand to lose 33% of your original deposit. The most important point to note here is that you should not deposit the maximum amount you can afford to lose with your bookmaker. You should have a little extra over to cover any possible margins. If you cannot pay the margin the bet may be closed by the bookmaker, which may result in a loss even though, in the long term, you would have gained.
Finally, it is worth pointing out that while the overall objective of financial betting is to make a great deal of money short term losses should be allowed for and, indeed, should be expected. The secret of success is to ensure that those losses are not only money which you can afford to lose but small losses on the way to much bigger gains!
Credit Accounts
Credit accounts are normally only available to those who are established with a financial bookmaker. Under the Securities and Futures Authority (SFA) rules bookmakers are not permitted to offer credit without appraising your financial standing and betting experience. However, when you have been established with a bookmaker for a few weeks or months and have a satisfactory trading record you can ask to open a credit account.
With a credit account you are not required to make a deposit. You can place bets and ‘settle up’ later. The great advantage of this type of account is that you do not need ready cash to begin betting but the major disadvantage is that, in theory, you can lose money which you do not actually have. Credit accounts are therefore only recommended once you have gained some experience in financial betting.
“Clever Strategy: If you place two opposing bets, for example, that one financial market will rise while the other will fall it is possible to substantially reduce the deposit you must pay by setting one bet against another. Ask your bookmaker if this is possible, since they will not usually tell you. Note, however, that they are not obliged to do this.”
Bet Sizes: When you bet on the financial markets you normally bet a stake which is a fixed sum ‘per point’. Per point relates to the number of units the market moves during the course of your bet. If you win, your win will equal the number of points multiplied by the size of your bet, and similarly if you lose this same system is used to calculate your loss. Different dealers have different minimum and maximum bet sizes. Some accept bets as low as 50p or £1 although £5 is a more usual minimum bet. All bookmakers have an upper limit which varies according to the type of market and the client.
Keep a written record of your transactions with your dealer. However, most will also send you a written record within a few days. If you do not receive this, or it is wrong, you must contact the bookmaker immediately.
Whichever type of account you decide to open, do not be surprised if you are asked for additional information for example Utility Bills or proof of ability to
pay (e.g. Bank Statement.) It may seem a little impersonal or indeed prying, but the spreadbetting companies are regulated and need to ensure that they are following procedures.
It will take a few days to set everything up, which can be frustrating but is well worth the wait. Once everything is complete you will often be sent Handbooks
and/or Dealing Guides along with Account Number and User Name and Password information that you will need to access on–line trading. If you have deposited funds by cheque you may have to wait an additional day or two for your funds to clear. As a rough guide allow two weeks from sending your Application Form to being fully prepared to place your first trade.
Please, please fully digest all the information before commencing operations – believe us – a full understanding will increase your chances of success.