A spread betting account is vital to spread betting as this account is used to manage all aspects of this type of investing. The spread betting account is used to make monetary deposits in order to have cash available for one’s trades. Likewise, a firm will deposit profits into this account.
The spread betting account can be used to demonstrate margin for all bets. This means an investor may place bets based on the amount available in the spread betting account. In this way, a trader is placing a wager based on a percentage of what the trade actually is. Essentially, the trader is borrowing money to cover the bet.
Although money may be loaned to cover the full price of the bet, a spread betting account most typically needs to be settled at the close of every bet. Therefore, if the bet is a winning bet the firm will deposit the profits. However if the bet was a losing bet and money was used on margin, the account will need to be settled and the trader must make an additional deposit into one’s spread betting account.
A spread betting account is one of the first things a spread betting firm will require and without this no trades may be placed.