I did some research on something called "spread betting" recently. I learned a great deal from a site called SpreadCo. Let me get into a little bit of what I learned spread betting is all about. In traditional stock, futures, or forex trading, the trader usually purchases outright shares or a contract of a particular product in a specific number of units. For example, in futures a trader will buy 1 full contract, or 1 "E-mini" or "E-micro" contract, or 10 or 50 or 100 full contracts of a particular futures product like gold, wheat, CAD/USD and so forth. In stocks, a trader will buy 100, 700, 3000 or whatever whole number of shares in the company they want to trade. Well, from what I learned about spread betting, the system they use is similar but fundamentally different. Instead of trading contracts or shares, you're betting a certain dollar value for every tick that goes for or against your favor. For example, you can choose to "bet", "risk", or "stake" $10 for every tick that the price of a product moves. In some cases, the amount you choose to risk will result in the same value as if you had traded 1 contract of a futures product, but it doesn't have to.
Let me outline some of the interesting features I found while I was browsing the SpreadCo website. Margins could be much lower than if you were trading traditional futures contract. The reason being that, depending on how much you choose to risk per tick change in price, you could be trading only a small fraction of one full futures contract. I also discovered, that SpreadCo allows its US accounts to fund their accounts with a credit card.
I was curious about this idea of spread betting, so I decided to try the spread betting demo account available through their website. Some of the features that stood out to me were that you could easily open and control several charts through their web-based platform. This immediately stood out for me, because the brokers that I use don't make this very easy using their web-based platform, which essentially limits me to having my software based platform on only one computer that I need to have available to me. I thought that SpreadCo's versatile web-based platform could give someone much more mobility freedom than brokers that use traditional software based platforms. A trader wouldn't be tied down to one computer. One could pop into an internet cafe, or hotel business room, or a friends computer and access everything they need by opening an internet browser and logging in.
I also found order entry to be very simple and straight forward, it was almost "one click". You could quite easily enter a position very, very quickly. To compliment quick and easy order entry, the web-based platform also features "one click" position exiting. If you trade on a short time frame, this is a must have feature. The one click exiting looks like one of those little "x's" with a circle around it used to close windows, and its right next to your position status.
To check out the SpreadCo website, go to www.spreadco.com.
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