Spread Betting and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading Spread Betting and CFDs with this provider. You should consider whether you understand how Spread Betting and CFDs work and whether you can afford to take the high risk of losing your money
When choosing a Spread Betting provider, you should think like a businessman. The two main things you should keep in mind are;
Keep your costs low – Your main goal is to make profit
Trust is Key – Partner with a broker you can trust and one that can deliver on its promises.
It goes without saying that you need a sound trading strategy in order to be profitable, whether you’re a day-trader or a long-term position taker. But there are also a couple of important issues to consider which can make a very big difference when you’re choosing a spread Betting provider, particularly if you are dipping your toe in with small stakes to begin with.
Firstly, and most importantly in choosing a Spread Betting provider, there’s the spread. The spread is the difference between the buying (bid) price and the selling (ask/offer) price of the market you are trading. This is what your broker charges in order for you to open and then close a trade and you have to overcome this spread in order to make a profit. You don’t want to pay too much, so make sure you do some thorough research when choosing a Spread Betting provider and look for brokers with the lowest spreads – at least for the markets you plan on trading the most (be it the FTSE100, Brent Crude or FX). Also, pay attention to variable spreads. Some brokers increase their spreads depending on the time of the day, if there are increases in volatility or if the spread on the underlying market widens. Furthermore, it’s also worth finding out what the broker charges for holding positions overnight (funding). After all, you may want to keep your position open for more than one day.
Last, but not least, don’t choose a broker simply because it offers low margin requirements. It is vitally important to ensure that you trade your account sensibly and are fully aware of the risks of leveraged trading. Low margin requirements can be misleading in that they don’t properly express the risk inherent in a particular trade. You should open positions based on thorough technical and fundamental analysis (not because the margin requirement is low) and choose your stops and limits in the same way. Remember that keeping trading costs down is one step closer to being profitable. But the margin requirement shouldn’t be considered a cost. A small margin requirement can give you a false idea of the risks involved and won’t act as a buffer should a market move against you
In this regard make sure you partner up with an FCA regulated broker. You should also find out if they offer protection through the Financial Services Compensation Scheme. Also, it’s worth finding out how long the company has been operating and checking that it has a reputation for top notch customer service. All this would be a plus in terms of trust in choosing a Spread Betting provider.
I would also advise you to look at the educational material and market analysis that the broker provides on its website. How much the broker invests in the education of its customers can give you a good idea about where the company’s priorities lie. A strong set of training guides and regular market updates suggests that the broker is thinking about its customers and operating its business in a fair and helpful manner.
To conclude, the best Spread Betting providers are the ones that offer you:
Keep that in mind for choosing a Spread Betting provider and you will start off on a great footing.
Spread Co is an execution only service provider. The material on this page is for general information purposes only and nothing contained herein constitutes (or should be taken to constitute) financial or other advice which should be relied upon. It has not been prepared with your personal circumstances, financial situation, needs or objectives in mind, therefore any actions taken or not taken by any person on the basis of this material is done entirely at their own risk. Spread Co accepts no responsibility whatsoever for any such actions, inactions or resulting consequences. No opinion expressed in the material shall amount to (or be taken to amount to) an endorsement, recommendation or other such affirmation of the suitability or unsuitability of any particular investment, transaction, strategy or approach for any specific person. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. As such, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Spread Co operates a conflict of interest policy to prevent the risk of material damage to our clients.