From the pilot it is possible to work out your maximum stake by dividing how much you are willing to risk by the maximum volatility. So, with our bank of £5,000, a confident bet would risk £500. On a football supremacy bet where the volatility is five, that would mean a staking policy of £100 a whole goal. Caution is particularly needed on markets where elements can multiply up rapidly. Fans who bought Newcastle United on IG’s performance index in the Champion’s League clash against Inter Milan in December 2002 would have barely settled into their seats before facing huge losses.
Not only did the Geordies let in a goal in the first two minutes, but their hot-headed forward Craig Bellamy was sent off after five. Having bought in the mid-80s, their performance score after seven minutes stood at minus 33 with no hope of drastic improvement. It eventually made up at minus 17. The bottom line has to be that winning or losing one bet does not necessarily mean that much. Making money is a long-term game and you cannot be in it if you make a misjudged gamble that blows your bank away early on.
For beginners and those with modest stakes, the firms’ limited loss accounts are ideal. The concept is that it introduces a limit to how much clients can lose because if a bet is going against them and reaches a certain point, it is automatically closed with what is technically called a stop-loss.