Spread betting question

Wobblydeb

I've got a trial running on the iii demonstration of spread betting. Not real money ....... phew! :rotfl:

I understand the spread and have opened 3 positions (2 to go up, and 1 to do down) but I am struggling to understand why my "Trading resource" (or balance of account) has had a margin deducted.

The figures are:
Cash: 10,000
Unrealised P&L: -12.89
Total Margin: 270.72
Trading resource: 9716.39

How is the total margin calculated and why is it being taken from my resource?

For reference, my positions are:
Buy - Gold (per 0.1) 1002.3
Buy - Xcahnging 223.03
Sell - William Hill 174.03

Thank you!

tradetime

Wobblydeb wrote: »

I've got a trial running on the iii demonstration of spread betting. Not real money ....... phew! :rotfl:

I understand the spread and have opened 3 positions (2 to go up, and 1 to do down) but I am struggling to understand why my "Trading resource" (or balance of account) has had a margin deducted.

The figures are:
Cash: 10,000
Unrealised P&L: -12.89
Total Margin: 270.72
Trading resource: 9716.39

How is the total margin calculated and why is it being taken from my resource?

For reference, my positions are:
Buy - Gold (per 0.1) 1002.3
Buy - Xcahnging 223.03
Sell - William Hill 174.03

Thank you!

When you use a Spreadbetting company to trade on financial markets, you are essentially trading a derivative of the product you are trading, so to take the Gold for example, you are essentially trading a derivative of gold, just like a futures contract or a CFD. thus you have to put up a certain amount of "collateral" or "Margin"
How do they work it out, should be posted on their site somewhere, it will be a percentage of the value of the position, possibly something like 1%. On their site, if you can find "Market Information sheets" or something like that, where it details the spread of each product they offer, it should also show the margin required to hold a position in that security.

Wobblydeb

So if my position closed at the point given above, would I lose £12.89 or £283.61?

tradetime

Wobblydeb wrote: »

So if my position closed at the point given above, would I lose £12.89 or £283.61?

In the example you gave you would lose the £12.89, the £283.61 would be credited back to your trading resources.

Wobblydeb

Thanks for that