Recommended account size

[busfarehome]

I have been spreadbetting on demo for a while now and at some point will attempt to open a live account.
The application form asks for income and savings amount.
I am self employed, do the SB companies ask to see proof of earnings and savings?
Just wondering what criteria they use.

 

[Chad Seven]

I have been spreadbetting on demo for a while now and at some point will attempt to open a live account.
The application form asks for income and savings amount.
I am self employed, do the SB companies ask to see proof of earnings and savings?
Just wondering what criteria they use.

No they don't ask for proof in my experience. I expect it's an ass covering exercise in the event you blow your account, end up homeless and try take them to court.

 

[tomorton]

They may not ask for proof when you open the account, just a declaration on the form. You can assume that they will accept what you say is true when what you say does not lead them to any serious liability - but you can expect to be asked to prove what you said at some point - such as if you try to withdraw money from the account. The anti-money laundering regulations in the UK are really tight - the firm will not risk being found guilty of money laundering.

 

[busfarehome]

Thanks Chad and Tom.
I have been asking general questions with the company since opening the demo account and have established that there is a negative equity protection so I would hope not to lose the house as a private trader.
My self employed income is less than 15k but the form was not asking for a specific amount.
I had planned to initially fund the account with 1k before committing anymore on a live account, this would come from my savings which are in a bank.

 

[tomorton]

Its very difficult to trade with a small account. There are psychological issues - how seriously will you treat it if you might only make 20 quid on a trade, and if you're only risking a tenner, well what's a tenner going to buy anyway?

There are logistical issues too - its difficult to trade something with a wide spread on a long time-frame with a small account capital, and margin restricts how many trades/orders you can run at once. For example, £1 a pip on GBP/USD will lock up £410 of my account's margin, so pretty quick you find that running one or two modest trades means you can't take any more opportunities, putting the brakes on your experiential learning.

If its a UK FCA-registered broker or spreadbetting or CFD firm I recommend taking at least £10k from the bank (where its getting beggar all interest anyway) and trading with a 1% risk per trade.

 

[tomorton]

But demo a £10k account before you trade with real money.

 

[busfarehome]

I have 2 demo accounts, the first was automatically opened with 10k, I still trade that account but asked if I could open a demo with 1k which they have done.
I trade the Russel 2000 with £0.5 a point, the spread is 0.3 and margin requirement for each position is £32.
I have asked if the demo is different to the live account with regards to spread widening and execution speed, answer was they are the same.
So I wanted to start off with a small deposit and see about spread widening and execution speed.
I am patient, my goal is to earn £20 a week. If it goes the same as demo I will add funds and scale up.
I am still earning from my self employment.