THE MARKET RANGE – WHAT‘S ON OFFER FOR SPREAD BETTING?
Spread betting has become a financial instrument increasingly used by traders. It is important to carefully compare spread betting brokers as some may offer different markets to others. The trade offer is limited with some spread brokers, but as you expand your trading, you may want to trade on as many markets as possible. Even if you prefer a few core markets, it’s a good idea to have the option to expand your trading – especially if you think you’ll be active in spread betting for the long term. Additional trading options, like Forex, CFDs or ETFs, might also be a good idea if you don’t want to limit yourself to spread betting.
Forex, CFDs, indices and raw materials
A broker is especially attractive if the trade offer is as broad as possible. With many providers you can engage in spread betting and trade CFDs on indices, commodities, foreign exchange and equities. A broad trade offer is a very good basis for trading, but in a comparison, you should take a closer look and get an idea of how the broker is positioned with regard to the underlying assets.
Conditions: Costs of Spread Betting
Checking fees is an important part of a broker comparison. A consideration that is crucial when selecting a spread betting account is the cost of transactions. This is usually expressed in pips in the spread. Even a difference of one pip can be to your disadvantage – depending on the number of transactions you are likely to make. In a spread betting broker comparison, you should take care to check out the cheapest provider who also qualifies in all the other areas, since this will definitely pay off for you.
Possible additional fees
Trading costs should be listed in a transparent way. In addition to the spreads, you should check whether commissions are taken – some providers charge commissions only for certain products. Any fees for the trading account should also be examined. Usually, accounts are free of charge, but there may be minimum deposits, trade minimum limits and deposit margins, so be sure to study the terms & conditions to see if additional costs are to be expected.
Spread betting brokers with multiple account models
Many spread betting brokers offer various account models. This is an advantage, as the costs and benefits may vary according to different levels of experience. Multiple accounts are especially interesting if, for example, there are accounts with fixed spreads – and even more so if the broker offers other financial instruments you wish to trade. Check our broker comparison to find out if different account models are available, and look up other criteria, such as whether a better service or additional services are available based on the account model you choose.
Another of the criteria to be included in a broker comparison is the minimum deposit. While this is no indication as to whether a broker is reputable, it is a factor that helps many traders make up their minds about opening an account. Spread betting is interesting even for very small investors, so a high minimum deposit can be a significant disadvantage. Since brokers know spread betting appeals to retail investors, the minimum deposit may be small to non-existent, but some providers do require a deposit of £100.
Spread betting trading platforms and mobile trading
The trading platform is important. Most platforms share the same functionality, and some are more intuitive and investor-friendly than others. Checking the platform is crucial in your selection of a spread betting broker. The software should be reliable, easy to use and provide a clear overview of your activities.
A good trading platform offers:
- Intuitive handling – even for beginners
- Access to a wide variety of tools
- An easily customisable interface
While some brokers offer multiple trading platforms, many rely on a proprietary one, which allows them to better respond to clients’ needs. Proprietary software often comes with a better range of trading tools as well. However, the majority of brokers also provide proven trading platforms like MetaTrader 4.
If you want to have a good spread betting experience, you should try out the respective services to find out if the software really suits you. Most brokers provide apps and mobile software solutions for additional flexibility and trading on the go, using a smartphone, tablet or iPad.
Usability of a spread betting broker‘s website
The user-friendly aspect of a broker’s website is an important factor when it comes to assessing who is the best spread betting provider. This is not only about user experience, but also other factors important to a trader, such as customer service. All relevant and important information should be easy to locate and initial questions a trader might have should be answered. Website content should, of course, be available in a language you understand. The following information should be available at a glance:
- The range of markets on offer
- Account models and trading platforms
- Spreads and other fees
- Contact options and information on regulation
As many brokers operate internationally, you should expect an English language website. As a rule, you should have the option of selecting your language in the header area of the website, if you are not automatically redirected to the English language version. Some areas deserve a closer look – pages such as the legal documents, the price performance overview and also the support and/or FAQ should be available in your language.
Customer support – your contact in case of emergencies
Customer service is an important issue in spread betting, if you encounter a problem. Usually the most common questions will be clarified on the website, where many brokers provide a FAQ section. This should give you helpful answers to the most frequent questions. However, as this is not always sufficient, you should test the support service before deciding to register, to see if the contact paths, the times of availability and the competence of the customer service staff are adequate.
To be known as the best spread betting broker in the field of customer support, a provider should have support staff available at the times when you primarily use the services. While some brokers offer 24/7 support, others may only provide support on weekdays, or at fixed times extending to the early evening. Take a closer look at the contact options provided.
A live chat is very convenient and allows you to continue trading without needing to open an extra e-mail window or a form. The advantage of chat functionality is that you can receive an answer directly. But even a hotline might be a good communication solution – but be sure to check if there are any charges.
Methods for deposit and withdrawal
When deciding who might be the best spread betting provider for you, the methods of payment should be taken into account. Making a deposit into your account with a spread betting broker is the first step to start trading. Usually a wide range of payment options are on offer, including:
- Deposit by credit card
- Deposit using online services such as Skrill, Neteller or PayPal
- Deposit by SOFORT transfer
Most brokers give their clients a variety of options to choose from. While many traders still use a credit card as a means of payment – because of the conveniently quick transactions – others prefer payments by bank transfer, because these convey a sense of security. Bank transfers, however, are not always the best choice because of the typically much longer processing times. For quick transactions, Neteller, Skrill and SOFORT transfer are also available at many brokers.
When considering payment methods in your evaluation, keep in mind that quick transactions can make a lot of a difference. An important point to consider when it comes to payment terms are the possible associated fees and limits. Be sure to check these in advance.
Additional offers: spread betting demo account, webinars and more
A provider who wants to be regarded as the best spread betting broker for beginners should offer additional benefits – such as a demo account, and training and education options such as webinars, video courses, tips on strategies or eBooks. The crucial thing is not always quantity – and training is not only for beginners. Quality matters, and experienced traders may benefit from such offers as well. Therefore, it is a good idea to find out which tools and extras are available, including business calendars or automatic trading systems. Remember, a demo account is a major advantage.
Making the best of a spread betting demo account
If, as a beginner, you want to gain some spread betting experience without investing your own capital, the use of a demo account is an option. A spread betting demo account gives you the opportunity to try out the platform and test trading strategies. If the demo account is available only for a limited time, this is not a big mark against the broker, but of course an unlimited version is especially advantageous. You should check on the amount of virtual credit provided and see if you can trade with the demo account under real trading conditions, in an environment that replicates a live account.
Regulation and deposit insurance – is a Spread Betting Broker reputable?
Of course, with financial instruments such as spread betting, the possibility of fraud cannot be excluded completely, but regulation provides information on whether a broker’s activities are controlled, with action taken if necessary. In order to obtain a licence, a broker must comply with regulatory requirements. This is the responsibility of the respective financial regulator wherever the head office of the broker is located. A provider offering services in other countries as well is usually also registered with local authorities in those countries.
Security of client funds and data protection
In order to counteract spread betting fraud, you should select a broker offering encrypted data transfer. Without encryption you run the risk that the data might be intercepted and misused by hackers. However, this is not the only aspect to keep in mind when considering who might be the best spread betting provider. As well as regulation, insurance of client funds is particularly important. You should find out if your deposits are insured and up to what amount. You should also check whether a broker keeps assets and client funds in segregated accounts.
A broker comparison should contain the following important points:
- Client fund insurance
- Data encryption
Providers in the test: Trade press reviews and awards
If you have found a broker who seems suitable in most of your key areas and meets your needs, then it might interest you to find out if the provider has been mentioned in the media or has received awards for achievements. Check specialist magazines – they conduct regular tests and give awards such as ‘Best Spread Betting Broker’. A look at recent reviews lets you find out if there are changes that the broker has made, the offers they make, and their rating by the press. Usually, brokers are happy to refer to media coverage on their websites and link to relevant reports.
The trade press and various websites dealing with spread betting providers regularly give awards. Factors evaluated include support, the platform, the trade offer, or the complete package. First place typically goes to the broker who delivers top services in these respective areas. Look for titles such as ‘Best Trading Platform’ or ‘Best Spread Betting Broker’ – and check that they are recent titles. You will also find customer reviews and ratings of the respective brokers, but these may be subjective and should therefore not be that crucial in your decision.
Market overview and market outlook
Spread betting is an increasingly popular leveraged product where traders need to come up with a small percentage of the full value of a position, which may be up to 100 times greater than the actual trade value. The trader need not buy the underlying assets, allowing them to speculate on the price movement of various markets like indices, shares, Forex, commodities and on rising as well as falling prices. As the number of underlying assets increases, this financial instrument will, without doubt, become more attractive, especially to experienced traders. However, traders should always keep in mind that spread betting is a very risky option.
Assessing future developments
With an increasing number of brokers providing the option to trade online, the market is constantly growing. But what are the prospects for spread betting? In the UK, spread betting is a financial instrument that provides a tax-free option to trade on price movements of many other instruments, like indices, commodities or Forex. This, together with an increase in the number of underlying assets available, makes spread betting popular with traders. It will likely remain so, provided tax laws do not change in this respect.
Using comparisons and reviews to select a broker
Our comparisons and awards should guide and support you in your search for a provider. They will tell you which provider managed to convince us in our spread betting broker test. Nevertheless, a broker should ultimately meet your personal needs. You may want to consider various criteria and compile a shortlist before coming to a decision. When you are clear on exactly what you need, we recommend a broker comparison for a closer look at vital aspects such as regulation and deposit insurance, costs, trading offer and software.
A preference for spread betting does not exclude an interest in other types of investment. Many brokers provide an extensive range of offers, such as CFD trading, stock trading or Forex trading – all in addition to spread betting. If you are collecting information about the various spread betting brokers and you are interested in trading CFDs as well, then a CFD broker comparison may well be useful.
AskTraders offers in-depth information on a range of financial instruments. Take advantage of our free comparisons and broker experience reviews to make sure you find the right spread betting broker for your requirements.
Top 3 Spread Betting Broker Comparison
74% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.