If you’re looking for a great spread betting broker, you have options. You can take a look at online reviews to see how other traders like your different options, or even download a demo account and test them out for yourself. But at the outset of your search, it’s good to go in with some criteria of your own.
This article makes suggestions for what that criteria should be. Because beyond all the subjectivity that goes into making a broker better or worse for one individual trader, there are some factors that are essential to a positive trading experience across the board.
In spread betting, the spread refers to the distance a market must move in order for you to make a profit from a trade. For example, if you short a stock valued at £10 with a spread of 0.1, you’ll need the stock to drop 10p before you begin to make a profit. If the spread is 0.2, you’ll need the stock to drop 20p before making a profit.
The narrower the spread, the less the market needs to move for you to profit, the easier it is to make money. And if you’re thinking there’s a drawback to tighter spreads because they would also theoretically make it harder to lose money, you can guess again. There is no threshold that’s crossed before you begin to lose money. Returning to the scenario described above, if the £10 stock you shorted increases in value by just 1p, you’ve already begun to lose. The spread does not pad your losses, only your wins. That’s why tight spreads are so important.
The greater the access your spread betting broker has, the more options you have to invest. Most major spread betting brokers in the UK will have the major domestic, U.S. and European markets covered, but some will lack smaller and foreign markets.
For many traders, the majors are enough. But advanced traders, as well as those simply wanting a wider array of options, should prioritize brokers with more markets. The markets a spread betting broker has access to can often be found on their website, but if not, you can use a demo version of their platform to see your market options firsthand.
A broker’s platform greatly influences a trader’s experience. Part of it’s just the feel; do you like the way it’s laid out and the way it looks? And part of it is functionality; how quickly are your trades executed?
A lot of money can be won or lost within a few seconds when you place a spread bet, so quick execution is fundamental. As a trader, nothing is worse than purchasing a position, seeing the market move in your favour, then receiving a message that your trade was not executed in time, or that you obtained your position at the new value.
Most brokers offer some version of each type of platform, but this isn’t uniformly the case. And even those that do offer both don’t always provide equal quality. That’s why it’s important to identify the devices you most like to execute your trades on.
Some spread betting brokers offer traders an extra reason to sign up for an account. This might be a one-time bonus when you deposit a certain amount of money, or you might get cash back based on the value of your trades. Some of these programmes can be quite lucrative.
It’s important, however, not to start making trades for the sake of earning cash back. It’s the same trap some of us fall into when we have a rewards credit card. Always be sure the primary reason you make a trade is because you expect that it will have a profitable outcome, not because you want to earn points for a rewards programme.
Having your broker go bankrupt and losing all your funds isn’t something you want to think about, but it’s something you need to consider. Sure, it’s unlikely to happen, especially if you’re trading with a reputable spread betting broker. But make sure there’s a parental guarantee, or some official client money protection clause before making a deposit. After all, spread betting is risky enough, and you don’t need to introduce the possibility, however slim, of your funds being wiped out completely.
Taking these criteria into consideration for determining the quality of a spread betting, you’ll be able to find the one that suits you. Take a look at the list of our top spread betting brokers to see your best options.