Which Spread Betting Company?

Before I started betting I needed to open a spread betting account with a reputable firm. There are quite a few in the UK who have financial spread betting products and more of them are starting to widen their product range to appeal to more people. But with so many spread betting brokers in the market, and more being added every year, how can you choose which one(s) to go with? Here is a guide to what is important, that will allow you to focus on what matters.

Before you can spread bet, you need a spread betting account. The choice of spread betting provider that you use can make a difference to the amount of your profit, or whether you make a profit at all. While most companies struggle to remain competitive with each other, it is worth checking around to find the best deal.

Cost is an important consideration when you are looking for a spread betting company, particularly if you are an active trader who is going to be doing a lot of deals. In spread betting the cost takes the form of the bid-offer spread so narrower spreads are generally better.

You also want a spread trading company that allows you access to a wide range of markets or instruments, for example offering a broad selection of international equities on top of London-listed shares.

The first spread betting firm was IG Index, way back in the 1970s, but it was only in the late 1990s that the spread betting market really expanded. Clients of IG Index can trade online, over the phone or via their mobile phones. IG is authorised and regulated by the Financial Services Authority. In any case it can be useful to have accounts at more than one spread betting company so that you can check on the tightness of the spreads, and any new products being offered, and sometimes you may find that one company accepts bets that another is refusing.

The spread betting brokers that you choose must be selected on your personal preferences, and on your intended way of spread betting. You will not find one spread betting provider who consistently beats all the others, as competition dictates that one cannot dominate the market all the time. Factors that are important to check include: –

  • the range of products,
  • are the specific products you are currently planning to trade available,
  • how tight are the spreads, particularly on your intended instruments,
  • how automated is the website, for example does it automatically set stop orders,
  • how easy is the software to use.
  • how reliable is the platform.
  • what extras are offered online, such as training courses and economic calendar and news feeds,
  • how good are the charts, analytics…etc
  • if you are off-line, how good is their telephone trading service,
  • how good is their bet execution,
  • is the customer service available and knowledgeable,
  • are there any other benefits, such as paying interest on your deposited funds?

Of all of these factors, the most important must be whether the products that you want to trade are available, but the tightness of spread is also extremely important. It is possible to live with an inferior trading platform as long as you have the tightest spreads so that you are retaining as much as possible of your profits.

However, even more important than tightness of the spreads is platform reliability. You need good execution and the platform has to remain usable even during volatile market conditions, thereby allowing traders to access their account at all times.

As an action plan for picking your spread trading brokers, first you should look through the marketing literature and the advertisements to determine the key players that you want to research. Then visit their websites to see which ones appear best and to check out the product ranges offered.

From this initial short listing, draw up a comparison of the size of spreads. It can be worth looking to current customers, but you should beware of comments posted on forums and Internet bulletin boards for two reasons – firstly, just one disgruntled customer out of thousands can make a lot of noise which may not be justified, and secondly it has been known for brokers to arrange for good comments to be left. After you make your decision, you can open more than one account, for flexibility.

How to Choose a Spread Betting Broker

This is one of the most important decisions a new trader will have to make and all effort should be made to find a reputable and well documented reliable provider. Costs should be negligible and companies should be transparent operators as most of the real cost is normally represented as the spread itself. Spread charges should be fully examined as it’s easy to find acceptable terms for small amounts at the outset but over time once up and running with a winning system such charges can prove quite penal in the long term. It is often crucial to benefit from early gains to maximize profit and to get momentum rolling so small charges can be reflected higher over time.

Important factors to consider when choosing a spread betting company

In addition to trading fees broker interest policies should be carefully looked into as spread betting is literally involving borrowing money from the broker to cover the spread so interest is sometimes overlooked by clients. Choosing the right spread betting broker should also depend on your own betting style as you don’t want to have to conform to their betting rules if it doesn’t suit your way of betting. Charges are one factor but the spreads mean so much more as it should be a true reflection of the competitiveness of the broker. Those that genuinely want your business should prove why they stand out from the crowd and attractive spreads should be a must. Look for the tightest spreads first as an early indicator.

Low margin spread betting companies

Margin trades may prove useful if you have limited money. A margin trade only requires a small percentage as an investment usually between 3 to 10 percent. You should also stick to a broker that offers the markets you are interested in. If you want to trade gold for instance, then choose a broker that offers such markets and also possibly has specialist markets that may offer you more opportunity for your knowledge level. A good broker should have the full range of the basic target markets such as the major business indices and currencies as well as stocks and shares.

Another thing to look at is the accessibility of the broker. Trades can often hinge on timing to gain any advantage and there are markets opening and closing globally so having full access at hand at any given time should be aimed for. Finding a broker that you can talk to could pay dividends in the early trades as you find your style.

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