UA-93896423-1 Spread Betting Broker Comparison - Spread Betting Broker Comparison

Spread Betting Broker Comparison

Spread Betting Broker Comparison has been designed to help clients navigate the various spread betting brokers that are available these days. Spread Betting is undoubtedly one of the greatest advancements to be made available to the financial markets over the last two decades for retail and professional traders. It has helped open up markets and new trading strategies for the private and professional home traders in ways that have previously not been possible.

Spread betting is popular in the UK and there are currently more than 50 brands and platforms to choose from. The trader bets on the movement of the share price and use leverage to trade. Traders have the ability to go short and potentially profit in bear markets and also gain access to major indices such as FTSE, DAX and S&P. One major advantage of spread betting is that it is categorised as a bet and consequently no capital gain tax is charged in the UK.

Before you dive into the spread betting world, you need to sign up with a spread betting broker. The spread charges that brokers charge might at first look insignificant. However, for a trader that will place thousands of trades every year, these fees and other nominal charges quickly add up to substantial amounts of money. In some cases, the charges for extreme spread betting can even wipe out the profits made in successful trades.

Below are some important factors to consider when choosing a spread betting broker:

Compare Spread Prices

The first thing that you should always take into account when choosing a spread betting broker is the up-front charges. Each trade is charges two different fee: the bid price and the ask price. The difference between these prices is what is known as the spread. Betting companies make money through these spreads.

This fee is paid by the trader for the privilege to access the stock market. Brokers, therefore, do not charge commissions when traders place bets. As a trader, you would of course be best served by a broker who charges fairly.

Margin Trade Requirements

The margin requirements of different spread brokers vary a lot. This is usually dependent on the broker you choose and the underlying assets you have chosen to trade. Margin trades require a small percentage of the total value of trades to be paid as deposit. The percentage is usually between 3%-10% and depends on the liquidity of the underlying asset.

Market Options

Another important factor that you will need to consider is the kind of market provided by the broker. This will help you reap maximum benefits during certain market conditions. Brokers that provide a wider variety of underling assets give you more opportunities to profit from trades, and diversify your portfolio by having high risk instruments such as indices with lower risk instruments such s commodities.

Broker’s Interest Charges

For long-term traders, the interest charge becomes an important factor to take into account. Financial spread betting are leveraged and you have to borrow capital for trading from brokerage firms. Interest is charged on the borrowed funds and can accumulate rapidly. The interest can either work in your favour or cut into your profits depending on the asset being traded. Be sure to check the broker’s interest policy.

Broker’s Availability

Customer service in spread betting is an important factor just as it is in other types of trading. The broker should be available at all times. This is important when the trader needs to quickly withdraw from certain positions or if the platform breaks down during trading time.

Is the Broker Regulated?

Reputable and trusted spread betting firms in the U.K. are regulated by the Financial Conduct Authority. The Financial Conduct Authority helps to secure a degree of protection for consumer’s funds. The Financial Conduct Authority also prohibits the spread betting firms from pushing any financial advice to their clients, meaning brokers are not allowed to recommend certain trades or advise clients to take profits. The broker can, however, offer the clients advice on the most suitable type of spread bet.

To protect traders, the Financial Conduct Authority requires spread betting firms to segregate their clients’ funds from those of the company.

When choosing a spread betting broker, always ensure you are going with a regulated broker as a minimum.

Other Considerations

Other key considerations that are often overlooked by traders when choosing a spread betting broker are:

Will the broker go bust?

Can the broker fix any trading errors that occur?

Admittedly, it’s usually hard to determine with a high degree of certainty whether a spread betting brokerage firm will go belly up. But there certain precautions that, nevertheless, you can take. You need to check whether the firm is well capitalised and financially sound, whether you are doing spread betting to hedge longer term positions, or simply to speculate. Remember that even segregated funds are only segregated from the company’s money. If the client encounters a massive loss, the broker might be forced to use client’s funds to cover the equity shortfall until the difference is made up for. Luckily, for amounts larger than £48,000, the clients’ funds are fully insured; so this is not a potential risk.

It’s usually advisable to disregard the lure of white labels. A white label platform is one where the spread betting company places its logo on the spread betting platform. Usually these companies will entice you with offers like matched funds on your initial bonus. Some large firms offers as much as £10,000. While those kind of offers can be hard to resist, it’s important for the trader to remember that a quick bonus can be easily wiped out by a single bad trade. The trader should consider the other factors mentioned here as first priority; then all things being held equal, the broker that offers a bonus is of course a more attractive proposition.

Using a white label broker means that you will be using a middleman and not dealing directly with the provider. A customer of a white label is essentially a customer of the underlying brand and not the actual brand. This can complicate things like when the trader tries to get some recourse whenever a trading error occurs. This can make the whole resolution process much lengthier.

The fact of the matter is that all companies experience trading errors both from dealers and clients. Your broker should be able to sort out such problems. This might give a slight edge over public companies compared to private ones because they are required by law to make their financial accounts public on a regular basis.

This, however, does not in any way mean that brokers from public firms are inherently better than traders from private firms. It’s better to check their track records and reviews to get an idea what you will be dealing with.

In the final analysis, you have to do adequate research before settling for any spread betting broker. While a good broker cannot save you from bad decisions, they can nevertheless make your trading experience mush smother and increase your chances of winning.

What is financial spread betting?

Very simply it is a way to bet on the price moves of a financial instrument.  This could be anything from shares to gold and crude, FX or house prices.  There are a few key differences between traditional investing.  Firstly, it’s a bet so there is no tax on profits (at the moment).  Secondly you trade on margin as you bet on a per point basis so you can make or lose much more than your stake – which makes spread betting a high risk/high reward product.  Many of the spread betting brokers listed in our comparison tables have very good education articles, videos and demo accounts for potential clients to practice on. You can read up on how to get started by reading.

Spread betting company reviews

We review the best spread betting brokers and look at the top accounts.  Read our review of Core Spreads, or see what users think when they reviewed ETX capital.  Our review of PLUS 500 the CFD provider gives a good overview and we also look at all the major spread betting companies.

How important are tight spreads?

Tight spread betting spreads are indeed an important part of trading though spread betting.  But it important to take other considerations into account as well.  A broker may try to win your business by marketing ultra tight spreads on a couple of the main products, but then increase spreads on the more exotic asset classes.  You also need to make sure that when you pick a broker the spreads are always tight, not just during normal trading hours or excluding periods over economic figure releases.  In some circumstances it may be best to go with a broker that has consistently tight spreads throughout it’s entire asset class range rather than just on a few key products.  That being said, if you only trade two or three indices and FX pairs, they go with what broker will give you the lowest trading costs and have back up accounts for other instruments.

Financial Security – a key feature of any broker…

It goes with out saying that you need which ever broker you use to be financial secure and established.  Before opening an account, always do some background digging into the company as there have been a few examples of spread betting companies going bankrupt and traders having problems getting their funds back.  An easy way to keep an eye on a companies financials is to go with brokers that are traded themselves on the London Stock Exchange.  Being a public company means that you have to submit financial reports on a regular basis.  The share price and market cap are also good indicators of whether or not a company is heading for trouble.  If a broker is not listed on the stock exchange you can have a look at their accounts on companies house or on websites like duedil.com.  If you are trading through a spread betting white label it’s important to check just what balance sheet you are using, the brand or the underlying provider.

Best MT4 spread betting brokers

MT4 is on the of the best ways to trade FX online, and now many spread betting brokers now offer MT4 as a platform.  If you are interested in spread betting on MT4 you can review the best MT4 spread betting accounts here on our website.

Spread Betting on Foreign Exchange, FX or Forex

The FX market is the most traded asset class in the world.  The major pairs offer great liquidity, tight pricing and good intr-day trading ranges.  Because of this brokers are able to offer low margin rates, meaning high leverage.  So Spread betting on FX is one of the best ways to trade foreign exchange.

Regulation and it’s importance

Spread betting in the UK is regulated by the FCA and the FSA register provides a database of the company status, the management and also their regulated employment history.  By doing a search on the register you can quite easily find out what experience and pedigree the management have.  Never, trade with a company that is not regulated by the FCA.  Most brokers display their regulator status in the footer of the website at the bottom.  Our spread betting company comparison tables only include spread betting brokers that are regulated.

Welcome offers and trading bonuses

As the market for spread betting customers is becoming fiercely competitive, brokers are looking for a way of rewarding clients who sign up and open a new account.  Most spread betting welcome offers range from a £100 welcome bonus or deposit incentive of up to £10,000.  There are always a few terms attached to these offers, but if you are a regular trader there is no reason why you can’t keep on trading as normal to claim the cash back or bonus funds.  Never trade more that you normally would just to get a bonus and check the terms before hand. Usually you will have to trade double the amount of the offer you will receive to claim it.  This is quite a reasonable way for spread betting brokers to get new customers, offer good incentives with out costing them more than they would earn from a new account.

Range of markets offered by a broker

Some spread betting companies focus on tight spreads on a few key markets.  Others focus on providing a good value overall service.  When opening a new account, have in mind what asset classes and individual instruments you want to trade.  If you are more interested in AIM and small cap shares you will need a broker that specialises in them.  If that is the case it may well prove beneficial to open a second account with one of the major providers where you can trade pretty much what you want when you want. All brokers will offer the major index, commodities and FX pairs though.

Added value

Inherently, most brokers are the same. There is not much difference in spreads, funding charges, range of markets and platforms there days.  So one thing to look out for if you are after value (other than tight spreads) is what else you get as part of the account package.  Some spread betting accounts provide access to third party research and analysis services.  Some provide direct market access and others are stripped to the bone and offer nothing other than access to the platform.  If you are happy to have various screens open then this may appeal, but a quick look at the spread betting account features comparison table should give you a good indication of what additional services spread betting accounts will give you.

Reviews

A quick Google will tell you most things you need to know about a spread betting broker.  There are a plethora of spread betting review sites that have expert, factual and user reviews on spread betting accounts.  Be mindful never to take others views to seriously and always make you own mind up about a spread betting company.  The key points are what we have listed above, but as always do your own research before committing.  If you are new then start small, you can lose more than your initial deposit so get lots of experience before trading up.

Spread Betting Guides, Tips & Strategy

We’ve put together a few spread betting guides that can help you navigate the world of spread betting.  The financial markets are difficult to profit from and spread betting is a high risk leveraged way of speculating that can result in significant wins and losses.  Make sure you fully understand the risks involved by familiarising yourself with how it works.

Which is the right broker for you?

Every trader is different and every spread betting broker is different in small ways.  True, most offer the same thing for the same price, but personal preference can make a bid difference in how you interact with the trading platform, the brokers and ultimately how you picking the the right spread betting broker can effect you win/lose ration of trades.

Some golden rules of day trading…

There are some key principles that all spread betting traders should adhere to if they want to make money.  Check out our three golden rules to profitable day trading to see if you use these strategies every time you make a trading decisions.  If not you may find that paying a bit more attention to your strategy, discipline and objectives will make a big different.

Trading on the go

It is essential that any broker you use has the ability for you to check and close your positions on the move. You can compare the best Financial Spread Betting Mobile Apps to make sure that you don’t lose touch with the market for moment.  Most brokers still offer dealing support by phone, but with high risk bets on you need to be connected all the time.

Welcome bonuses and offers

The white label brands and brokers that focus more on FX and indices tend to offer good welcome bonuses as a way of getting new clients and funds on account.  They can seem a little tacky and seen out of place in the serious world of financial spread betting.  However, the best  betting broker welcome and bonus offers can be used to give you some free trades for bets you perhaps would deem too risky to put on in normal circumstances.

Who are the major players?

Spread betting is dominated by several firms, but as there are relatively little barriers to entering the market.  new firms are cropping up all the time.  We’ve put together a quick summary of all the major spread betting brokers in the UK.  Good brokers last because they provide good customer service and fair pricing.  Being the cheapest is not necessarily the best when it comes to trading.

Binary trading versus spread betting?

Are you an idiot? Then Binary Betting may be for you….  this may seem a little harsh, but it’s hard enough to make money spread betting.  It’s a well known fact that most inexperienced traders lose money.  But binary betting is even more volatile.  There are some advantages such as fixed losses and short time frames though.

Bitcoin – need we say more

I’m sure your eyes have already rolled over and a nerve is popping in the back of your head at the concept of trading such an unknown instrument.  however, if you really must trade bitcoin this is how….

Betting on the volatility of the markets.

There are various indicators that will show you how volatile the market is.  In most cases a moving market is easier to trade than a stagnant one.  You can spread bet on market volatility using the VIX, a futures contract based in Chicago. It’s not the easiest indicator to follow or understand but once mastered can be an invaluable tool.

Price differences between brokers

Today, most brokers spreads and prices will be fairly similar, but on occasion there may be an opportunity to arbitrage between brokers but to be honest the way information is distributed and based on how competitive the industry legitimate arbitrage opportunities will be rare.

Smaller cap stocks

There are pros and cons to spread betting on the smaller stocks.  Obviously a pro is that if they sky rocket you don’t have to pay tax (at the moment) on your winnings.  The cons are that they are illiquid and as such can be very volatile. The best way to spread bet on the AIM market is through a spread betting broker you have a good relationship with and talks to the market directly.  Even if you are a big client you may find the dealers get annoying with you.  But if you hold the positions long enough you’ll also end up paying a lot in interest overnight funding.

Spread betting on property

It is possible to spread bet on the UK housing market going up or down but only through a small number of brokers.  Spreads will be wide and the market does not move much.  If you manage to track down a price double check how long it will be honored for and what size you can bet.  It may be a good hedge against a property portfolio, but check the funding rates for short positions if that is your intention.

Technical versus fundamental analysis

Most spread traders use technical analysis as is provides a good visual representation of the market and is generally more relevant to short term moves.  However, it is based on historic events where as fundamental analysis looks at what a company should be worth in the future.  Technical analysis verses fundamental analysis in spread betting is a debate that will probably go on for either, but at the end of the day it is down to personal preference.

Profiting from profit warnings

It’s sad but true, there is easy money to be made in the market by betting on a company under performing. They say profit warnings come in threes so there are many bear traders out there stalking the market for potential victims.  Shorting stocks is how you use spread betting to bet on a downward market and can be profitable, but beware losses are unlimited.  You can only make as much as your stake goes to zero, but in theory a stock price can go on up forever.

Spreads vs. CFDs

It is easy to see the difference between spread betting and CFDs.  CFDs in the UK are for professionals as they provide direct market access and anonymity (to an extent). Outside the UK CFDs are used by private clients as there are no tax benefits.

Hedging with spread betting

No this is actually a valuable application of spread betting. Using spread betting as a hedging tool can be both an efficient way to manage a profitable position for tax purposes.

How does it really work?

Do you really want to know how financial spread betting the markets works? If you do great, but in reality, you make money if you call the market right, you lose if you don’t.  Understanding the mechanics of the product isn’t going to help you be a better stock picker.

Training courses to be a better trader.

If you’ve just asked yourself  “Should I enrol on a trading course to learn spread betting?” The answer is no you shouldn’t.  You should avoid spread betting all together.  It’s a high risk product for high risk experienced investors.  Most trading courses are run by people with little or no knowledge of the actual market and let’s be honest, if they were good traders you they certainly wouldn’t be teaching.

Why do most people lose money?

I’m sure that you’ve read somewhere that most traders who spread bet lose money?   But, what is the main reason most spread betting clients lose money? The answer is pretty simple, it involved around getting involved in something with out enough experience.  Spread betting is not an easy way to make money, and should not be marketed or promoted as such.  It is a facility to bet on the financial markets to be used appropriately.  Most brokers do good job of ensuring that clients have some investment experience before allowing them an account.

The evil B book

The B book has a pretty bad reputation, rather unjustly.  It’s a little unfair as the industry wouldn’t exist without it.  Some ask how can the B Book Model in spread betting really still exist in the current financial climate?  The answer is simple, without it all the brokers would go out of business.

Brokers actually like it when you make money

Some do anyway.  Some spread betting brokers actually love it when you make money!  Spread betting is not an evil industry and in fact offers some of the best customer service and retention rates around.  Clients can stay loyal to the same broker for decades.

Making money as a spread bet trader

If you’ve just Google can you make money spread betting? The answer is similar to whether or not you should go on a training course.  The answer is no you can’t. Some people can, but only experienced investors and speculators, will find there way into the 20% of clients that across in the spread betting client universe of around 100,000 clients actually make money.

White label brokers – any good?

Some yes, some are just pointless.  A white label gives established financial companies the opportunity to give their client base an additional service or another way of doing business with them.  Many customers in the financial industry are loyal to brands that help them make and save money or provide good advice.  However, going with a white label brokers that doesn’t already exist providing their customers with financial services has no value.  Better off to go with one of the major providers you can see the who’s who of spread betting white labels here…

 

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