Spread Betting Companies Comparison
There is plenty of choice out there when it comes to spread betting. However, it’s a good idea to ensure that you do a spread betting companies comparison before you proceed to set up an account and make that all-important first deposit. This article will share more details about how to do that.
Safety And Security
It may seem on the face of it like a boring task to have to think about, but checking the security record of the spread betting provider that you plan to use is important for many reasons.
The most important reason is that you are likely to be transferring large sums of cash to the provider you eventually go for.
It’s a wise move, for example, to check whether the provider “segregates” client funds deposited by people like you from the funds they use to pay their own costs, such as staff wages or server fees: that way, if the firm goes bust your funds are at least slightly more protected.
You can also verify at this stage whether or not the provider is regulated by a relevant authority.
In the UK, this is likely to be the Financial Conduct Authority. You should ask your potential new provider whether or not they have a Financial Conduct Authority registration number, and then double-check this in the FCA’s register.
Trading Costs – Fees And Spreads
Moving away from safety and regulation, it’s also wise to check out what fees your spread betting provider might charge you.
Before you do this, it’s important to familiarise yourself with the business model of the providers in question so that you can approach the issue with an informed mindset.
The term “spread” refers to the difference between the price at which you buy the asset and the price at which you sell it; a provider of spread betting services will, in most cases, make a pre-agreed deduction from this spread as the cost of doing business.
How that “spread fee”, as it is known, is calculated can vary in different situations.
In some cases, the provider will charge what is known as a fixed spread, which means they don’t respond instantly to market moves.
Spread fees can also be variable, which means that market forces play more of a role in setting the price. And, in some cases, the provider may employ a different business model altogether by charging commissions instead.
As a spread bettor, your role is to ensure that you choose the right model – and hence provider – for your needs.
If you’re able to respond in a nimble and agile way to price fluctuations, perhaps by having lots of time and liquidity on your side, variable spreads might work for you; if you want certainty, fixed spreads will be better.
Don’t forget to check what spread fees are like at different providers, as that’s a crucial way to ensure you don’t get ripped off.
Range Of Assets
Not all spread betting providers offer the same asset classes. Some spread betting sites, for example, specialise in the provision of particular assets: if you know for a fact that you don’t want to trade forex, for example, a company which offers 100 forex pairs but very few other instruments is unlikely to meet your needs.
The asset classes you’ll go for will depend on your personal preference, time and risk tolerance. The foreign exchange market, for example, tends to only function during the week.
An asset class like cryptocurrency, on the other hand, may be available to trade all the time. It is worth noting here however, that cryptocurrency trading on margin was banned by the FCA for UK traders.
So you will need to stump up the full value to open a position on cryptos – even when spread betting.
Forex also tends to require a strong understanding of global economic forces like interest rate-setting procedures, whereas other asset classes are one step removed from macroeconomic factors.
And volatility can also change from asset class to asset class: Bitcoin, for example, is known for being much more volatile than – say – some bonds.
Speed And Platforms
Finally, it’s a good idea to take your potential provider websites for a test drive before you actually make any deposits.
Many spread betting sites offer demo accounts, which work by allowing you to sign up and “trade” without actually depositing any money.
The difference, of course, is no profits – or losses – can be made. Doing this is a smart move, as it allows you to see whether or not your chosen provider invests the time and resources into making their site as user-friendly and speedy as possible.
You can also use this testing period to work out how you can make deposits – and whether this fits with your requirements.
Some providers, for example, may have the infrastructure in place to accept a wide variety of payment methods including credit cards and crypto-wallets.
Others may have a more restricted range and instead use only bank transfers or the two standard debit card options, Visa and Mastercard.
Don’t forget to also check whether or not there is a delay on withdrawals, or whether any fees are charged to remove any profits you might make: this is not uncommon among providers, so it’s always wise to check.
When it comes to finding a spread betting provider, then, there’s clearly plenty to look out for.
From ensuring that their fees are cost-effective to making sure they are regulated by a relevant body, the responsibility is on you to do your due diligence and make sure you go for a provider that is safe, cheap and fast.