With so many spread betting firms available nowadays, what should you look out for when picking out a spread betting broker? It’s worth spending some time to compare spread betting brokers.

Reputation and Credibility of the Company: The first thing I tend to look for is a strong reputation, at least with some history. If you’re going to deposit large amounts of money with your broker such as £1,000+ than you need to be selective with which company you choose to use.

Leverage, Margin and Deposit Requirements: Traders prefer accounts that give them the higher leverage and deposit margins possible. For example, Capital Spreads offers a margin of 10:1 which means that if you deposit £100 you can take up positions worth £1,000 whilst being leveraged against the company. The higher the leverage, the better the financial spread betting broker because this allows you to trade on smaller capital deposits whilst making large profits speculating on movements in the markets.

Tight Spreads: The spread is a measurement of the commission that the company takes in all of your trades. It is the difference between the offer price and the bid price (aka buy and sell price). A tighter spread on markets allows you to make higher profits in your trades. Normally you should look out for 1 point spreads.

Demo Accounts: Most spread betting platforms offer demo accounts that allow you to sign up using your details and practice using the software without depositing any money. Instead, you are given free money to invest (e.g. $50,000 in play money), and you can speculate on the different virtual markets, monitor your trading positions, and use the different stop-loss and limit order features.

Spread Betting Broker — Choosing the Right One

The number of spread betting brokers there are these days just astounds me. Every time I check them out there are more and more. It might be difficult for a beginner to sift through all of these as they don’t know what to look for.

Do you want to do sports betting or financial betting? There are spread betting accounts that do both and then there are those that specialize. You need to be 100% sure of this when you begin and stick to what you have selected for a while.

You want to be interested in keeping the costs of your trades down. Spread betting companies make their profits from the spreads of the trade as they don’t charge a commission, so make sure you compare spreads. This means that you want your broker to offer small spreads.

If you are doing financial trading then it is crucial that you can trade in the instrument of your choice. If you want to trade in gold then it is important that the broker offers commodities. If you want to trade in individual stocks then make sure they don’t restrict you to trading indices.

Have you thought about opening 2 trading accounts? It can be really useful in assessing the quality of the spread betting companies. Don’t worry about this too much when you are a beginner but as you progress then this is definitely an option.

Research Financial Spread Betting Companies and Platforms

When you are researching and comparing brokers and deciding which spread betting company to open an account with, we all know that tight spreads are important, but why are tight spreads so important, and should they be the only thing that you consider when making this decision?

The main cost to financial spread bettors is the spread, the difference between the offer and the bid, which is why the closer the spread the better the investment. Therefore it goes without saying, the wider the spread the more costly the investment to you, the investor. Finding a company that offers you the tightest spreads allows you to recover your investment quicker, unfortunately, the way the spread works you always start by making a loss and need to wait for prices to move outside the spread in order to move into gain. So if you compare companies, the spreads that they offer should be the first thing that you consider.

Margin requirements are another important factor to consider when doing a spread betting comparison. Margin is the amount of money you need in your trading account in order to make a trade. A low margin requirement means that you are only required to deposit a small portion of the value before you can open a trade. As discussed, margin requirement and tight spreads are clearly not the only thing that you should be looking at when you compare companies. Remember that spread betting allows the trader to take a geared position so you can always lose more than your initial deposit. It is therefore important to consider how to minimize your risk by taking advantage of the various tools many brokers make available to you. This is an important consideration when researching spread betting companies as many companies offer a vast array of education and learning tools to help their traders minimize risk — which you should be looking to take advantage of. See below a selection of tools that you should consider when you are deciding which spread betting company to open an account with.

Services and tools that spread trading companies offer to minimize risk include; new account offers, 24 hour trading hours, automatic stop losses, guaranteed stop losses, and trailing stops are other points that you should compare when looking at spread betting companies. Many spread betting companies also offer a wide selection of learning tools that you must take advantage of. Nobody expects you to jump into spread betting without any helps so always open a FREE demonstration account. Demo accounts allow you to trade with virtual money and receive access to a range of markets. Demo accounts allow you to familiarise yourself with the different financial spread betting platforms on offer without risking your own funds. Becoming familiar with trading platforms is vital when you start to trade with a new spread betting broker as you will minimize the risk of making elementary mistakes that can be easily avoided. Finally, it is always advisable to stay “in the know” and attend some FREE seminars that the superior spread betting companies have on offer, if you can’t physically get to them then try to log-on to an online seminar that let you to keep your trading knowledge up to date in the comfort of your own home or office.

The Positives Of Financial Spread Betting

Over the last decade, many investors have found their success within the financial spread betting marketplace. There are numerous reasons for the popularity; one of which is trading on margin. When using margined trading this is the initial deposit which the spread betting broker requires for you to open your position, and it is meant to cover any unfavorable movement in the position in which you are holding. Generally, it is a certain percentage of the underlying product.

Since spread betting uses leverage the trader is able to make more substantial trades than the amount which is in their opening deposit. From this same account, the trader is also able to make positions in many trading markets such as; commodities, precious metals, currencies, indices as well as shares.

Although there is a high risk factor involved when utilizing leverage on the market movements when financial spread betting there is the ability to help avoid serious loss by using stop loss orders. When the trader opens their position they place the stop loss order with the spread betting broker, this will have a loss level listed and the broker will then stop (or cut) the position if it reaches that level.

Within the United Kingdom they do not consider this form of trading actual investment activity as there is no changing of hands like when share trading, this means that there is no taxes to be paid and due to no capital gains being made there is also not a stamp duty or Capital Gains Tax (please note that this could change at any time, however at the time of this article this statement is true).

Another positive aspect of margined trading within financial spread betting is the opportunity to sell long or sell short. When you are selling long you are basically placing your position on the movement rising in price and will profit if indeed your speculations are correct. Naturally, if you are wrong and movements decrease you will suffer loss. When one sells short they are actually buying their position while it is high, but are betting on it falling.

There is a huge potential for profit from within margined trading and spread betting; however, it is extremely important that one knows how this method of trading works first. Make sure to follow updated announcements as well as create your stop loss orders; since you are investing using leverage there is a very good chance you could lose more than you have actually deposited into your account.

Advantages of Using Spread Betting Account

In this day and age of stable and super-fast Internet connection, spread betting sites that specialize in the delivery of up-to-the-minute online trading application such as Tradefair, IGIndex, and Capital Spreads are becoming the norms of mainstream online trading. This trading software gives day traders of differing circumstances all the trading tools that they need in identifying clear and reliable indicators to sell or buy on a particular future market position.

This trading tool also gives day traders the all-important guide on various trading decisions including options to move for a trade, monitor progress and conditions in the market, and exit from a trading position. Spread betting offers these leverages to day traders without the consequence of broker commission, and all trading activities are done online.

Through financial spread betting, beginning and seasoned traders alike are given the wherewithal and capacity to trade on commodities like gold, oil, and wheat and also on share indices like the Dow Jones and FTSE 100; all these trading activities can be done across a broad range of currencies. One of the distinctive features of spread betting is that the financial spread is not subject to tax.

Here are the 5 major reasons why you have to go for financial spread betting:

1. Easy to implement

Financial spread betting is anchored on the general principle of making a bet on a specific stake per point. This kind of system works well in practically all types of futures market and in all market conditions. Initially, the system may appear to be complicated and tricky, but after going on a trial run, you will learn that it is a pretty simple system that even a newbie can follow without missing a beat.

2. Minimal initial capital requirement

You don’t have to break your bank account to start with the system, and with a minimal amount of capital infusion, you can already go on spread betting. In contrast to share trading, you won’t have to concern yourself with broker’s commissions. This means that you don’t get weighed down even if you go for small trades. The incidental costs are already imputed in the spread size and remain the same across the trade range regardless of the size of your trade position.

3. Absolutely tax-free trading system

The financial benefits gained from this system are not levied with tax duties nor do you have to pay stamp duties every time you make buy. This translates to windfall profits especially when you are making financial headway and breaking the capital gains threshold. However, you have to closely monitor possible changes in tax laws to ensure that you are on the ball with regards to the real earning potential of your trading position.

4. Currency fluctuation shield

When you make the buy in countries with different currencies from your account, then you are exposed to an additional risk due to potential dips in the currency value. On the other hand, when you engage in spread betting, your transaction is played out on the point-on-point shifts, and the currency factor is not included in the trading equation. The good thing about this system is that you have the leverage to play the dips and peaks of the currency on which you are making the trading position.

5. Diversity in application

This type of trading system allows you to play with your stakes on different markets using a single spread betting account. This means that you have to flexibility to go for individual equities, both local and foreign, currencies, house prices, commodities futures, interests, and bonds.

Conclusion

If you select the wrong one then what do you do? Well firstly don’t worry as it is not the end of the world. Just start looking at the spread betting brokers again until you find the right one.