How much can you bet?

What is the maximum/minimum I amount I can stake per point? The minimum new bet size may be £1 per point. There is no explicit maximum however; it is dependent upon your available trading funds, the liquidity in the underlying instrument and at the dealer’s discretion.

The amount you can bet depends strictly on your betting limit. This is determined by your spread betting company according to how rich you are. If you are wealthy, you can bet a lot. If you are poor, you cannot bet much… – at least, not without covering your bet with a large deposit.

The reason for this is obvious. If the bet goes against you, you MUST be able to pay the company. They have powers to seize property, etc to satisfy your gambling debts, so make sure you know what you are doing and have the money to cover your losses. This is more than a restatement of the number of rule of gambling – never bet money you cannot afford to EASILY lose.

Also, there is no definite rule as to how much of your capital you should stake on a spread betting trade, but you should definitely never risk all your capital on a single trade. Some experienced traders take on the stance that you shouldn’t risk more than 1% to 3% on a single spreadbet. This in practice means that if you had £10,000 in your trading account, you should never risk more than £200 on a single trade (if risking 2% of your pot). Using a computation like this makes it simple to decide how much to risk per point, and where to place the stop loss.

Also, the spread betting provider will not normally permit you run up losses which they estimate you are unable to cover. This is simple, common sense. They are protecting their position, but more importantly, they are preventing rash punters from losing their shirts trying to emulate Nick Leeson!

For example, you may want to bet £300 a point on the December FTSE, but if the market moves against you by (say) 200 points, then you owe them £60,000! Is this small change to you? Can you laugh at these losses and dash off a cheque with a merry smile on your lips? Unlikely… It is more likely you will be thinking of selling some assets. For this reason, you would not be allowed to place this bet. Instead you would be limited to a more modest £30 a point, for example unless you put an upfront deposit.

In short, the bets you are allowed to place depend upon your means (income and savings). I think this is a good think and certainly it has never worried me.

“There is no maximum amount you can trade. You will only be limited by the funds you have available on your account or any liquidity constraints in the underlying market. If you want to trade in more than the standard market size, the dealers will in most cases happily work an order on your behalf.”

How do you decide what to trade?

Personally, I’m a bit like a boy in a sweets shop at the moment, moving from forex, shares, spread betting and back for foreign exchange trading..etc

If you are just starting out, I’d say you would do well to stop and think about a few things: how often will you deal, how long will you be holding trades and whether you are more interested in certain industries or markets; for instance programming, mathematics, financial news, poker..etc Responding to these questions with honesty will help show you the path but the worst thing you should do as a beginner is just to hop around without direction chasing the money. You really should choose a market asset class and stick with it sufficiently enough to give it a fair go.