Jump to content

Leverage Help Needed.


JoeG

Recommended Posts

Hi, 

I'm quite new to this, however have a made a few trades so far. I was told by using the spreadbet interface you can avoid the standard tax rate however whenever I make a trade is the platform forcing me to use leverage? Typically I was always taught to use a very small amount of leverage if any at all. Can somebody help me understand this a little better? 

Link to comment
2 hours ago, JoeG said:

Hi, 

I'm quite new to this, however have a made a few trades so far. I was told by using the spreadbet interface you can avoid the standard tax rate however whenever I make a trade is the platform forcing me to use leverage? Typically I was always taught to use a very small amount of leverage if any at all. Can somebody help me understand this a little better? 

Hi, yes spread betting is nearly the same as contracts for difference but is not taxed. Both are leveraged type accounts and you are trading a derivative of a product rather than the actual product itself.

So you will use some leverage but that can be limited by using smaller position sizes (bet size or number of contracts) on your trades rather than using the maximum size allowed (using up the full margin requirement on your account ).

On IG's web based platform the lowest size is usually  50 pence or £1/point, on the MT4 platform it is 10 pence/point.

Link to comment
On 19/12/2019 at 10:25, JoeG said:

Hi, 

I'm quite new to this, however have a made a few trades so far. I was told by using the spreadbet interface you can avoid the standard tax rate however whenever I make a trade is the platform forcing me to use leverage? Typically I was always taught to use a very small amount of leverage if any at all. Can somebody help me understand this a little better? 

Hi Joe,  It is advisable to trade 1% of your nett fund value and as you become experienced, this can increase to 2 - 2.5%.  However, this depends on how long you leave your trade open for.  I trade at 15 -20% nett fund value, but scalp, so my exposure is minimised.  It is vitally important that you establish your trading strategy and stick to it.  If you haven't yet done so, use your demo account and don't trade live until you fully understand your strategy.  Good luck.

 

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Posts

    • Sainsburys full year earnings and Unilever’s first quarter trading update both say the same thing, UK consumers are in for higher prices. The war in Ukraine, supply chain issues and the effects of ongoing Covid all to blame.      
    • US Dollar (DXY) Daily Price and Analysis US Q1 GDP may stall the greenback’s advance. A 20-year high nears for the US dollar. The multi-month US dollar rally continues with the greenback printing a fresh high today ahead of the first look at US Q1 GDP at 12.30 GMT. The US dollar basket (DXY) has been boosted by renewed weakness in the Euro and the Japanese Yen, as investors move from lower-yielding to higher-yielding currencies, while safe-haven flows continue to benefit the greenback. The US growth release later in the session is expected to show a sharp slowdown from the robust Q4 figure of 6.9%. The markets are currently pricing in growth of just 1% for the first three months of this year, with the slowdown mainly due to a reduction in inventory accrual over the quarter. This release is unlikely to move the greenback, unless there is a large miss or beat, as the Fed believe that 2022 US growth will be robust enough to let them tighten monetary policy sharply without damaging the economy. The latest US Core PCE data – the Fed’s preferred inflation reading – is released on Friday and this may have more effect on the US dollar than today’s GDP data. For all market moving economic data and events, see the DailyFX Calendar. The ongoing US dollar rally has been aided by weakness across a range of G7 currencies including the Euro, the Japanese Yen, and the British Pound. The Euro continues to battle with lowly growth expectations, exacerbated by energy concerns, the British Pound is mired by weak economic data, while the Japanese Yen is in freefall as the BoJ continues with its ultra-loose monetary policy.   The US dollar continues to press higher and looks set to break above 103.96, the March 2020 high. Above here the US dollar would be back at levels last seen nearly two decades ago. The March resistance will likely hold in the short-term, especially with month-end portfolio rebalancing at the end of the week, but US dollar strength is set to continue in the months ahead. USDOLLAR (DXY) WEEKLY PRICE CHART – APRIL 28, 2022 {{THE_FUNDAMENTALS_OF_BREAKOUT_TRADING}} What is your view on the US Dollar – bullish or bearish?   Apr 28, 2022 | DailyFX Nick Cawley, Strategist
    • While Tesla has nothing directly to do with Elon Musk buying Twitter - TSLA stock closed down 12% on news that Musk may have to sell stock and use other holdings to stand against the loan to finalise the purchase of the social media giant.        
×
×
  • Create New...