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Published On: Tue, Nov 6th, 2012

How to Choose a Spread Betting Company

 

There are an ever increasing number of spread betting firms on the market that are looking to attract your business.  Due to this high competition, you will find that pretty much all the brokers out there claiming to offer the tightest spreads, best trading platforms and widest market choice.  They can’t call be the best though can they?

We have written this guide to highlight the main aspects to consider when deciding upon which spread betting company to sign up with.  There are a number of brokers it is worth staying away from and although we can’t mention any names, we can do our best to steer you away from them.

In no particular order, the following are the main things to look for when choosing which firm to trade with:

Security of funds

One thing all spread betting companies claims to offer is the security of its clients’ funds.  OK, chances are whoever you trade with, your money should be safe but as we found out with Worldspreads, this isn’t necessarily the case.  The best advice we can give here is to research the company you are going to use thoroughly, especially if you intend on depositing large sums of money into your account.

Also consider the track record of the broker.  For example, IG is a company that has been around since the early 1970s, makes annual profits of hundreds of millions of pounds and had a segregated client funds account.  Therefore they are as safe as you are going to get.  Similarly City Index has been operating for decades and is also financially strong.  These of course aren’t the only two companies of positive note – there are many reputable secure companies out there.

Spreads

As we mentioned before, all spread betting companies claim to offer the very best spreads.  Although you want a company that is generally competitive with its charges, the most important thing is to research charges that apply to the markets you intend to trade on.  Different brokers offer headline spreads that apply to particular markets.  If you plan on mainly trading on Wall Street then City Index charge just 1 point spreads on the index or individual stock.  IG Offers best value on gold with a spread of just 0.5.

Market Choice

Although most firms will offer access to the majority of core financial markets, some offer an extremely extensive selection, in some cases; in excess of 10,000 (I won’t name any names!).  If for example you enjoy speculating on AIM shares, you will find that many companies do not offer access to them due to the volatility and relatively low demand for most of the companies listed on the index

Trading Platform

The last thing you want to do is trade with a company that uses an unresponsive platform that suffers downtime during busy periods.  OK, this is rare these days with high speed broadband and better quality servers but we have encountered such problems with some brokers quite recently.  It would also be advisable to trade with a company that offers high quality charts and good value access to higher level analytical software.  Ultimately the best advice we can give is to test a platform out by signing up for a demo account.  Most companies offer them and they will give you a taster as to the quality you should expect to receive when you sign up and start betting with real money.

Summary

If you are serious about spread betting then you are going to want to thoroughly research the company you sign up with.  There are some great companies on the market and a number of poor ones.  The right company for you though will generally depend upon the markets you are looking to trade and the spreads the company offers on that market.  Scour the internet to find the best company for you as it might end up saving you a great deal of money, not to mention frustration

 

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.

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