- Do you want to be self-directed or passive?
If you choose the self-directed approach, you’ll personally execute your trades and investment, speculating on market prices based on your trading plan and strategy. You can trade or invest using the self-directed approach for more flexibility and control.
With the passive approach, you’ll take long-term positions, buying and holding stock portfolios managed by experts, and earning possible profits from dividends, rent and interest.
- What markets and assets do you want to trade?
There are several markets that you can trade, including forex, cryptocurrencies, commodities, bonds, ETFs, options, futures and so much more.
You can trade all of them using a spread betting or CFD account and also invest in company stocks using a share dealing account.
- What level of risk can you accept?
With us, you can customise the level of risk that you’re comfortable with when you deal in Smart Portfolios.
Investing in ETFs using Smart Portfolios can also enable you to diversify your exposure across a range of assets, companies, geographies, and sectors. While investing in shares carries greater risk given, you’re getting exposure to individual companies, it is important to compare your risk and reward ratio before you invest with a share dealing account.
When it comes to trading derivatives such as spread bets and CFDs, there’s more risk involved due to these being leveraged products. When you trade on leverage, you put up a faction of money as a deposit to get exposure to the full position size. This deposit is called your margin.
At a margin requirement of 20% – common when trading shares, your leverage ratio is 1:5. So, a 1% movement in the market price would result in a 5% change to your position. While leverage brings down your initial outlay, note that your profits and losses could substantially outweigh your margin deposit. It’s important to take steps to manage your risk to prevent major losses.
Read More: Compare trading accounts