Compare Spread Betting CompaniesPlease remember that losses can exceed deposit and accounts are subject to suitability checks.
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Choosing a Spread Betting CompanyThere are a lot of platforms offering an array of services.
Selecting a spread betting company is often a matter of personal choice. Even in this office we disagree over the benefits and advantages of different providers. However, there are several key points to look out for, regardless of personal preference.
Note that on SpreadBetMagazine we normally only discuss firms that are authorised and regulated by the UK’s Financial Conduct Authority (FCA).
Editor’s Personal View on Choosing a FirmI have a lot of accounts but like most people I tend to have a primary account (the account I use the most) and 2-3 other accounts that get used infrequently. They rest of my accounts are largely dormant apart from a few small test trades here and there.
That said, my “top 3-4” do change over time. E.g. I used to really like the simplicity of the Capital Spreads platform but the owner, LCG, changed to a new platform that I find less intuitive.
1) FCA Regulation is KeyThe firm must be authorised and regulated by the FCA. This is important for all the boring reasons:
2) User-friendly PlatformsNow that many of the spreads and fees are so similar across the various companies, the “user-friendly-ness” of a platform is high up my list.
The old Capital Spreads was the daddy of simplicity (alas Capital Spreads is no more, see above).
However, that platform design did spawn some useful, and somewhat similar, children e.g. InterTrader, Financial Spreads and CoreSpreads.
The IG platform has so many features and markets that it’s difficult for them to be in the user-friendly class. Having said that, they’ve done well in keeping their trading platform as simple as it is.
3) Tight Spreads on “My Markets”To keep trading costs low I look for tight spreads on the markets I trade the most.
…spreads on other markets are less important.
I don’t care if a spread betting company offers 0.8pt on the France 40. I hardly ever trade that market, I just want tight spreads for the markets I regularly trade.
I am willing to pay for wider spreads on markets that I don’t trade that often.
Also, wide spreads on exotic markets might be a good thing.
They can act as a healthy reminder that I know nothing about that market and so I shouldn’t trade it.
4) Longevity & SizeI do want some stability with my accounts. I know my funds are covered by the FSCS but I don’t want the hassle of filling in the forms and waiting to get my money back because I’ve been trading with a new kid.
Linked to longevity is ‘size’. You’d hope that the older firms have grown and by growing you’d hope they have the resources to iron out many of the bugs in their systems, bottlenecks in their finance dept etc.
5) Low Trading CostsThis is linked to spreads above. I don’t want to pay any commissions on trades.
Overnight financing is acceptable if the rate charged is the local interest rate + 2.5% (and it’s normally around that level with most firms).
Large Guaranteed Stop fees are annoying. Financial Spreads used to charge a whopping x10 your stake.
Having said that, Guaranteed Stops are getting a lot cheaper. IG and Financial Spreads now only charge the Guaranteed Stop fee if the order is triggered. There’s no charge if you close the trade yourself or if it hits a limit order.
The fee with Financial Spreads is x3 or x4 your stake on most forex and stock index products, that’s just about acceptable.
6) Clear PricingI like fixed spreads. I don’t like variable spreads. If a firm says they offer 0.7pt on the EUR/USD that’s what I expect to find when I open AND close my trade.
Variable spreads are occasionally better but often worse than the firms with tight fixed spreads.
Anecdotally, I’ve not seen any of the firms with variable spreads print what their average spreads have been over a 6 month period. That would be interesting to see!
7) No Dormant FeesThis is an annoying new cost that’s creeping in the industry. Sometimes you don’t use an account for 6 months or so and then you are charged a fee for not trading. This is often an irritating £15-30 fee.
Good customer service would be to at least warn clients that you are about to charge / irritate them. Alas that doesn’t seem to happen much.
8) “Good” OffersBonuses and offers are quite low on my list. Lots of offers just aren’t that generous or they have very stringent rules attached.
The rebates that InterTrader and Financial Spreads offer are OK if you trade daily or trade in large size.
If you are high frequency trading, e.g. +20 trades/day, then these rebates can really trim your trading costs. Of course, they only trim your costs.
Beware of any “deposit bonuses”. The T&C’s are often very restrictive and you often have to trade a lot in a short period of time to get the bonus.
Also see spread betting offers.
9) Quick Transactions: In and OutMost deposits are quick, no surprise there. Any withdrawal should be quick too. Note that it’s not always possible for a firm to give an instant withdrawal but it should take place within 24 hours.
Why no instant withdrawal?
If you have an open position(s), then the funds in your account might be covering that position. And naturally you won’t be allowed to withdraw any fund still being used to cover an open trade.
The biggest issue that irritates both clients and the regulated firms in similar measure is that the firms need to follow the anti-money laundering rules.
This is nearly always an issue when your debit / credit card expires and you want to make withdrawal.
The firms are legally required to check your ID and/or bank statement (but they should still process those ID checks quickly).
The best solution, if your card is expiring, or even 6 months from expiring, just withdraw your funds first.
Another quick tip to make the withdrawal process easier – keep your address details up to date, you can often just email the firms your new address.
Reviews of Spread Betting Companies Regulated by the FCA(This above is just a selection of firms, other firms offer spread betting).
Remember: Spread betting, CFDs and forex trading carry a high level of risk. You can lose more than your initial investment. These products are not suitable for all investors. Only speculate with money that you can afford to lose. Make sure you fully understand the risks involved and seek independent financial advice where necessary.