Posts Tagged ‘spread trading’

How to Rate the Top Spread Betting Firms

Sunday, June 19th, 2011

If you’re at all interested in financial trading (also known as spread betting or spread trading), then there are a number of options you have in terms of finding and opening an account trading on financial markets.

In terms of its position in the investment community, spread betting is still technically classified as gambling because the odds (or the “spread”) is set in the house ‘s favour. However, spread betting is extremely similar to other forms of financial derivative trading such as CFDs and Forex which use spreads to charge commission. Thus, the “gambling” definition of spread betting really is a loose one and people should actively be referring to it as “spread trading” rather than betting which is giving it less respect than it deserves among professional traders in the UK.

Factors for Choosing a Spread Betting Site Tailored to You

With such a large choice of spread betting sites – some with a UK focus and others with a more global touch, you can take certain liberties when choosing a broker which meets you needs.

The most important factor of all is the reputation and history of the site of course. Don’t bother signing up to a broker that isn’t regulated by the FSA (Financial Services Authority). All of the top firms such as Capital Spreads, Tradefair, ProSpreads and CMC Markets will of course be fully regulated. They may even be arms of banks or financial organisations that are also listed on the LSE or AIM (such as the London Capital Group which owns Tradefair Spreads and Capital Spreads).

Other companies, such as IG Index and City Index, have been around for more than 35 years and have offered excellent customer support and garnered recognition in the industry. CityIndex.co.uk for example has constantly added new technology and features to its platform, and even won the “Best Mobile Trading Platform” award at MoneyAM in 2010.

Spreads, Margin Requirements and Range of Markets

The second most important thing will probably be the size of the spreads and the range/competitiveness of markets offered. An experienced trader should want a large selection of financial instrument to trade on. In that case I would recommend CityIndex.co.uk which offers more than 7,000 markets to traders compared to Tradefair which only offers around 2,000.

The size of the spread differs between different markets and platforms, however all that’s important to you is that the tighter the spread the more profitable it is. For example, if you’re trading a commodity such as Gold bullion, then a 4 point spread at IG Index will be much more profitable and give you higher return on your income than a 5 point spread at Capital Spreads.

WorldSpreads actually offers a special “Zero Spreads” promotion to active traders with a Platinum Account. This means that if you deposit more than £5,000 (minimum amount required to open a Platinum Account) then you can open zero point spreads on markets such as the UK 100, DAX, USD/EUR, GPB/JPY and a few others.

Low Margin Requirements (IMR) will also benefit both experience and beginner traders by allowing you to open positions with lower deposits, e.g. having only 10% of your position in your balance.

Education Tools and Technical Charts for Trading and Beginners

The final most important element of choosing a spread betting site is its range of online tools, technical charts and guides for new traders. Each spread betting platform has its own range of online seminars, news alerts, training guides and risk management tools. Your job is to compare what exactly you’ll require in your trading platform and spread betting future and make a choice based on this.