Spread Trading Explained in 3 Steps

  1. 1
    Spread Trading with Core Spreads allows you to profit from the rise, or fall, of a financial market without taking ownership of the underlying asset.
  2. 2
    Spread Trading is what is known as a leveraged product, this means you are only required to deposit into your account a small percentage of the total value of your trade.
  3. 3
    Spread Trading makes trading accessible to all, low minimum trade sizes and dealing costs make this a product popular with thousands of retail and professional traders around the world.  

Spread Trading is a financial, leveraged product that allows you to speculate on the movement of 1000s of different markets, covering a multitude of asset classes, all from one account and accessed through one easy to use trading platform. 

You can speculate on the movement of a market by trading with us on leverage. This means that you require only a small percentage of the total value of your trade to be deposited into your Core account in order to begin speculating or hedging. Trading using leveraged products is high risk and it is essential to remember that, if your trade moves against you, you could still liable for the full amount of any loss, not just the small percentage of the trade value that you have deposited in your account.

So, what is a Spread? 

Just like in other forms of trading it takes 2 prices to make a market. A price to sell and a price where you can buy. The difference between these two prices is known as the ‘Spread’ or the cost to trade. 

The smaller the spread, or cost to trade, the greater your return on a successful trade. You will sometimes see Spreads or costs to trade being described as fixed or variable. At Core Spreads we offer some of the tightest fixed spreads in the market. When you are trading with us you always know what our spread will be, whereas when you are trading on a variable spread you have no control over the costs when you open or close your trades and this can severely impact your returns. We believe that it's better to know your costs before you start rather than receiving a nasty surprise at the end!

What does trading using leverage mean?

Because spread trades are leveraged products – this is where you only have to deposit a small percentage of the total value of a trade – they carry a high risk. The further a market moves in your favour, the larger the profit and the return on your initial investment. But the converse is also true, the further a market moves against you, the more you can lose. 

To place a spread trade, you need to deposit, into your Core account, what is called ‘margin’. This is effectively funds that are held by us, in a client segregated bank account at Barclays, to provide some cover in case you lose money on the trade. The 'margin' you need on your account is a percentage of the total value of the trade, sometimes this can be as little as 0.5%. 

Given this, and that markets can be volatile and unpredictable, it’s vital to pay attention to risk management and to make use of the tools that Core Spreads makes available on our Core Trader platform.

Core Spreads

Core Spreads is trading as it should be. Tight fixed spreads and razor sharp execution on thousands of markets.