Trading Forex Using Spread Betting

Trading forex using spread betting – Forex trading is a huge market, operating almost around the clock. Spread betting offers access to these markets via familiar platforms. So how can someone start? This article will explain.

Breaking into the world of investing, whether through forex trading or stocks and shares trading, used to require a significant amount of capital, the right connections, and someone willing to show you the ropes.

Today, you can find everything you need to start investing online, and you can start trading with as much or as little money as you like.

Forex Spread Betting Brokers

Click a broker for details
  1. 1
    IG
    Forex trading involves risk. Losses can exceed deposits.

    Ratings
    4.9 / 5
    4 / 5
    4.5 / 5
    3.5 / 5
    4.8 / 5
    4.5 / 5
    4.9 / 5
    5 / 5
    4.6 / 5
    4 / 5

    $0
    0.01 Lots
    1:30 (Retail), 1:250 (Pro)
    FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
    Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
    PayPal, Wire Transfer, Mastercard, Credit Card, Visa, Debit Card
    USD, EUR, GBP, CAD, AUD, JPY, ZAR, SEK, DKK, CHF, HKD, SGD

Here is a short overview of each broker's pros and cons

  1. IG - IG offers spread betting on 17,000+ markets, including currencies, indices, shares and commodities - more than almost every alternative. Notably, IG also offers spread bets on less commonly offered assets like IPOs, allowing experienced traders to diversify their portfolios. For casual traders, IG also offers the opportunity to spread bet on weekend markets – a terrific feature that we don’t come across often.

IG

"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."

Christian Harris, Reviewer

IG Quick Facts

Demo AccountYes
InstrumentsCFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
RegulatorFCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB
PlatformsWeb, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
Minimum Deposit$0
Minimum Trade0.01 Lots
Leverage1:30 (Retail), 1:250 (Pro)
Account CurrenciesUSD, EUR, GBP, CAD, AUD, JPY, ZAR, SEK, DKK, CHF, HKD, SGD

Pros

  • IG offers an extensive collection of professional and engaging educational resources, including webinars, articles, and analysis
  • IG is amongst the best in terms of its range of instruments, which includes stocks, forex, indices, commodities, and cryptocurrencies, providing ample diversification opportunities
  • As a well-established broker, IG operates under strict regulatory guidelines in multiple jurisdictions, maintaining a high level of trust

Cons

  • Beginners might find IG’s fee structure complex, with various fees for different types of trades or services, potentially leading to confusion or unexpected charges
  • IG applies an inactivity fee of $12 per month after 2 years, deterring casual investors
  • Stock and CFD spreads still trail the cheapest brokers like CMC Markets based on tests

One of the first and most important lessons that any new trader learns is that assets and financial instruments can go up or down in value; you can never guarantee what will happen.

Because every investment an investor makes comes with a degree of inherent risk, a successful trading strategy will seek to mitigate this risk in several ways.

Risk mitigation strategies vary depending on the type of trade you are making.

In this guide, we look at what forex spread betting is, some of the best forex spread betting companies to place trades with, and some tips to help you mitigate the risk when using spread betting to trade forex.

What Is Spread Betting?

Spread betting is a form of market speculation, whereby traders speculate (bet) on the direction a financial market will take (increasing or decreasing in value) without ever owning the underlying security.

Instead of buying a security at an advantageous time and selling it when it is worth more, the trader is betting on whether that security will increase or decrease in value.

There are two important numbers traders need to know when spread betting; the bid and the ask price, sometimes known as the spread. When investors place a spread bet, they bet whether the price of a security will end up lower than the bid or higher than the ask.

Benefits

Using Spread Betting To Trade Forex

Forex spread betting uses the principles of spread betting and applies them to the forex market.

Investors bet on the price movement of currency pairs rather than securities. As with regular spread betting, traders will be quoted a bid and ask price by the company offering currency spread betting.

They then have to decide whether they think the currency pair’s price will end up lower than the bid or higher than the ask.

The difference between the bid and the ask is the spread. The narrower this difference is, the more attractive the currency pair is. A narrower spread means lower transaction costs and greater profits.

Leverage

One of the key advantages of forex spread betting is that it enables traders to harness the concept of leverage when they place a trade.

Leverage means that the brokerage firm or platform processing the trade lends the investor the funds they need.

Instead of covering the full costs of the spread bet, investors only need to meet the margin requirements. The margin will be a percentage of the overall value of the bet.

As long as the investor can afford this, they can leverage the rest of what they need from the broker.

As with regular spread betting, forex traders using spread betting do not ever own the currencies they bet on. They are speculating on price movements.

 

Forex Spread Betting Tips

Set yourself firm limits and make sure you don’t exceed them. You should also read up on stop-loss orders; these are one of the most important risk management tools available for when the markets aren’t going your way.

Spread betting provides a simple and straightforward method for trading on the forex market.

By cutting commissions out of the equation, taking advantage of leverage, and generating tax-exempt gains, spread betting enables you to maximize the returns you make on your investment.