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. However, remember that your profits and losses are based on the full value of the trade (£1,000). As a retail client, you will never lose more than the amount in your account.
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 to open a trade, known as trading on leverage. Remember, trading ETFs on leverage can also amplify losses, so it’s important to manage your risk.