New to spread betting? This guide will walk you through placing your first spread bet on IG Index, using NVDA (Nvidia) as an example.
1. Open a Demo Account
It's always wise to practice with virtual money before risking your own. Open a free IG Index demo account here: Click Here
2. Important Notes
Tax Benefits: In some jurisdictions, spread betting profits may be tax-free. Check your local regulations.
Short-Term Trading: Spread betting is ideal for short-term trades on stocks, forex, and commodities due to its leverage and tax advantages.
Not for Long-Term Investing: Avoid spread betting for long-term buy-and-hold strategies.
Quotes in Cents/Pence: Pay attention to quote units, as they are often in cents/pence, not dollars or pounds.
Stake and Leverage: You're essentially betting a stake per point movement in the asset's price. Leverage can magnify both profits and losses.
3. Finding NVDA on IG Index
Login: Access your IG Index account.
Search: Use the search bar to find NVDA or browse the "Shares" menu.
4. Placing a Spread Bet on NVDA (Hypothetical Example)
Scenario: Let's say you believe NVDA's price will rise.
Buy Order: Click "Buy" to go long on NVDA.
Stake: Enter your stake – the amount you're willing to bet per point of price movement. For example, a $1 stake means you'll profit/lose $1 for every 1 cent NVDA moves.
5. Margin and Risk Management
Margin: Understand IG Index's margin requirements to avoid forced closures. Keep a margin of safety to cushion against potential losses.
Portfolio Margin: Monitor your available margin and ensure it stays within your risk tolerance.
Click Hereto read the IG index guide to margin.
Example of portfolio Margin:
The above shows you the portfolio margin used is 8785. It also shows I have an available margin at 3981. The size of this account is 13K. I would like to keep a buffer or margin of safety of 20%. So I would not like the available margin to drop below 2600.
6. Placing the Trade
Place Deal: Click "Place Deal" to execute your trade.
7. Adding Stop-Loss and Profit-Taker Orders
Stop-Loss: A stop-loss order automatically closes your trade if the price moves against you, limiting potential losses.
Profit-Taker: A profit-taker order automatically closes your trade when a certain profit level is reached, locking in gains.
Setting Triggers: You can set stop-loss and profit-taker orders based on price targets or a specific amount of profit/loss. In our case we have used price targets.
Go to ‘positions’ tab
For our NVDA example we will use price targets as our triggers:
Stop loss: As you can see we have entered 11500 ($115). If NVDA drops to 11500 or $115 we will close out the trade and take the loss. The loss will be (11902-11500) *1 plus costs = 402 plus costs.
Limit profit Taker: As you can see we entered 12000($120). If NVDA rises to 12000 or $120 we will close out the trade and take the profit. The profit will be (12000-11902) *1 minus costs = 98 minus costs.
Guaranteed Stop losses
Guaranteed stop losses can be a great feature with IG Index but there is a cost to it (if it is used). They do exactly what they say on the tin ...they guarantee your downside risk ...even with overnight gaps in asset prices.
Click Here to find out more. It is worth the read.
8. Understanding Costs
IG Index Fees: Familiarize yourself with IG Index's spread, commission, and overnight funding fees. Click Here to read IG Index explanation of costs.
This guide provides a basic overview of spread betting on IG Index. Always do your own research and understand the risks involved before placing any trades.
'Invest with confidence'