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Trading the financial markets without money on account can still be done.
There are two brokers that offer credit accounts, the well established sports and financial broker Spreadex and the new upstart Core Spreads (UPDATE: since writing this article Core Spreads no longer offer credit facilities..
The two brokers are very different, Spreadex has a large focus on being a smaller, personal and customercentric spread betting broker. As such the spreads are not as tight as Core Spreads. Core Spreads focus is on providing the tightest spreads in the business.
How does spread betting on credit work?
Basically it means that you do not have to have funds on account to initiate a trade. This can be quite helpful if you are not a regular trader and like to dip in and out of the markets when you see an opportunity.
You will have to cover the daily P&L of the trade and eventually put up the initial margin for the position, you may also be charge debit interest as you will be running an overdraft. What you have to pay and how much depends on your standing with the broker and your credit rating in general.
When you compare spread betting companies, offering a credit facility shouldn’t really be at the top of your list. Margins across the industry are at all time lows and you can get some very good leverage in the most liquid FX pairs and indices.
One thing to remember is that with spread betting you can lose more than your initial deposit if a trade goes against you. If you are a trading on credit, you do not even have an initial margin buffer for loss protection.
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