Leverage Help Needed.

[JoeG]

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? 

[Caseynotes]

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.

[Guest PatA]

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.