There are now over twenty spread betting
companies in the market, all offering low spreads, free charts and
news and some even going as far as offering an insight into how
their other clients are positioned in the market.
Competition - better deals for clients
Investment in technology has been enormous with firms
offering bespoke trading platforms built by internal
developers and others offering white label services (this is where
they use someone else's trading software but re-brand it as their
own). There are also a number of providers with mobile and
tablet trading solutions allowing clients access to the
markets whilst on the move.
With so much competition the cost to place a trade (width of the
spread) is now as low as has ever been seen in the industry which
is attracting new retail clients and also encouraging experienced
investors to try spread betting for the first time.
Other areas of competition are around client education and
trading tools with many firms offering spread betting seminars and
webinars for first time users as well as advanced charting and
real time news feeds to assist in making trading decisions. These
services are often free and provide further encouragement for new
clients to open accounts.
Tip: low dealing costs are important to
maximise returns from the market but keep in mind some of the value
added services on offer; these can make a real difference to your
Market makers vs Brokers
A broker acts as a middle man in a financial trasanction
finding the best price for their clients and matching buyers to
sellers. The term broker is, for this particular product, incorrect
as spread betting companies are acting as a market
maker and instead of passing your order directly to the market they
are taking your trade onto their risk books. They may choose
to hedge your trade in the underlying market and equally may decide
to take the other side of your trade in the hope that you have made
the wrong decision and will lose money. If they choose not to hedge
and your bet wins, they lose!
It may be a bet but it's still FSA regulated
Sports bets may be regulated by the Gambling Commission but
financial spread betting is an FSA regulated product. As a result
clients are afforded the same financial protection as
traders of futures or CFD's but are also required to
observe the same rules governing the markets.
Opening a spread betting account is often simpler than
opening accounts for other financial products and unlike these
other products no previous trading experience is
required . Most spread betting companies offer online
applications with many able to approve accounts within minutes.
With so many spread betting companies offering services it can
be a difficult to decide which provider to use. Trading.co.uk has
looked at the current providers and has created a unique
comprehensive comparison service to assist in you decision making
Further resources on Spread betting
Make the right choice with Trading.co.uk
The cost to trade is now as low as it has ever been but it's
important not to become too blinkered by this when you are making
your choice. Finding a broker that can offer you a service that
suits your type of trading style, risk appetite and technological
requirements is just as important as getting the lowest spreads. If
you have a question about a specific broker that is not already
covered please get in touch. We are an independent company with
many years of experience in the retail market and will endeavour to
find answers to any queries you may have.