ETFs
One of the advantages of spread betting and CFD trading is that you only need to deposit a percentage of the full value of your position – the initial margin requirement – to open a trade, known as trading on leverage. Trading ETFs with leverage amplifies both profits and losses based on the full trade value, so it’s important to manage your risk.
As an example, let’s say you want to put down a total of £1,000 on your ETF trade. Due to the leverage available with spread betting (5:1 in this case), you would be able to enter this position with an initial outlay of £200, instead of £1,000. Your profits and losses are based on the full value of the trade (£1,000).
As a retail client, you have negative balance protection, which means that you will never lose more than the available funds in your account.
When you spread bet or trade CFDs on ETFs with us, you don't buy or sell the underlying ETF. Instead, you’re taking a position on whether you think the ETF's price will go up or down.
With spread betting, you buy or sell an amount per point movement for the ETF instrument you’re trading, for example, £5 per point. This is known as your stake. With CFD trading, you buy or sell a number of units for a particular instrument.
You gain for every point or unit that the price moves in your favour, and lose for every point or unit the price moves against you.
Read about the differences between ETFs and CFDs.
When you invest in ETFs with us, there are no commission, account, platform, or custody fees to pay. A 0.5% currency conversion fee may apply.
There are a number of costs to consider when spread betting or trading CFDs on ETFs, including the commission (applicable to ETF CFDs), spread, holding costs (if you hold a trade overnight), and guaranteed stop-loss orders (GSLOs), if you choose to use this risk-management tool. Note that a GSLO premium is refunded in full if it's not triggered while your position is open.
View our trading costs for more information.
ETF trading can offer better value when compared with trading an individual constituent of an ETF as a share, and offers greater diversification through exposure to a group of related instruments, rather than focusing on a single stock. There’s no cost to open an account with us, and no minimum deposit.
Trading ETFs offers several potential benefits to traders. ETFs track a number of instruments within a single trade, so compared with trading on individual shares, ETFs can be less costly, while also offering more diversification. ETFs can also provide exposure to certain markets and assets that may not otherwise be available. Learn more about ETF trading.
All trading and investing carries a certain amount of risk, including ETF trading. However, when compared to trading on individual shares, an ETF comprises a wide range of related instruments. This diversification can help to reduce risk, because ETFs aren’t reliant on the performance of a single instrument. View our guide to managing your risk when trading.