Spread betting

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22. Placing a bet and managing your account

When your account has been opened, the indexation company will write to you with details of:

• your account number
• the name of your assigned dealer and the phone number to call to place bets

It's important to keep your account number secret. The indexation company is entitled to assume that anyone who quotes it on the phone is you, and that the bet is valid.

To place a bet:

• Ring your dealer and ask for a quote on the share or index you are interested in.
• The dealer will give you a buy price and a sell price ("September FTSE100 is 6100 - 6110").
• If you don't want to bet, tell him and ring off.
• If you do want to bet, tell the dealer how much you want to stake per point, and give him your account number and name.
• The dealer will repeat the bet back to you to make sure that he has heard it correctly.
• Once the bet has been confirmed, and the dealer has checked that it doesn't overreach your credit limit, he will execute the bet.

After the bet:

• You will be sent a contract note within 48 hours for every bet you have placed.
• You will be sent an account statement (usually every week) showing all the bets that have been closed or have expired naturally, and the cash credit or debit to your account.
• If you owe the indexation company money, the statement will ask for it to be paid within 7 days.

Margin calls:

• If your exposure to losses on a bet exceeds the indexation's credit limits, they will make a margin call - in other words, ask you to deposit money in your account to cover the potential loss.
• Margin calls have to be met quickly - it depends on the indexation company's rules, but 3 days is the norm.
• If you fail to meet a margin call, the indexation company may be entitled to close your bets without even asking you. At that point your losses will crystallise and they will look to you to meet the losses.

1. What is spread betting? 2. A brief history 3. Spreads on individual equities 4. Spreads on an index 5. Performance spreads 6. Other financial spreads 7. Practical advantages - leverage 8. Practical advantages - going short 9. Practical advantages - hedging 10. Practical advantages - volatile markets 11. Practical advantages - tax 12. Dynamics - think short term 13. Dynamics - the size of the spread 14. Dynamics - upside and downside 15. Dynamics - length of bet 16. Strategy - bet only what you can afford 17. Strategy - cutting losses 18. Strategy - stop losses and limited risk bets 19. Strategy - taking profits 20. Strategy - arbitrage 21. Opening an account 22. Placing a bet and managing your account 23. Regulation 24. Some more tips 25. Conclusion