With Spread Betting allowing you to speculate on whether the price of an asset will rise of fall, finding a reputable Spread Betting provider is made easier with our thorough comparison service. We compare the top Financial Spread Betting firms in the UK so that you can see who provides the most competitive spreads and margins for your trading strategy.
Services include products that are traded on margin and carry a risk that you can lose more than your initial deposit. These products may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our basic guide below the comparison table and conducting your own research. The comparison includes sponsored and featured financial spread betting companies.
Minimum Stake£1/point FTSE 100 Daily Spread0.8pt (fixed)margin: 40pts GBP/USD Daily Spread0.9pt (fixed)margin: 75pts Find out more
Low-cost spread betting provider with tight, fixed spreads. EUR/USD 0.7pts - fixed. Generous Welcome bonus and loyalty scheme available.
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A Basic Guide to Financial Spread Betting
What is Spread Betting?
You probably know how the financial market works-buy in and hope it goes up. But that's only for people with lots of money, right? Well, not always.
Spread Betting offers a tax-free* method of trading the markets, whether you've traded before or not. However, when financial trading with a spread bet, you can lose more than your initial deposit.
* While Spread Bets are currently tax-free, tax laws can change at any time.
Let's say you think a certain financial market is going to decline in value. You'd like to take advantage of this, but there are two problems in traditional markets:
They are restricted to “buy” trades only, so you can only take advantage of a rise in value.
Even if you could get in, you don't have enough money to cover the position. ;
Fortunately, Spread Betting can help you avoid the “rules” of other financial markets as it involves a combination of traditional betting and contracts for difference (CFDs). You also escape any additional commissions and fees, as these are included in the spread.
With Financial Spread Bets, you can speculate on whether a specific financial market will increase or decrease in value. Unlike traditional financial products, which typically only allow you to buy, Spread Bets can be entered as either buy or sell trades. You trade stakes of the underlying instrument price, but never actually own any part of that instrument.
Because of this, you can leverage your trades, or put up a small portion to cover a larger position.
However, leverage can result in substantial losses as easily as it can produce considerable profits, so make sure you are always managing your risk.
What are the benefits of Spread Betting?
Now one of the most popular instruments among traders in the UK, spread betting has attracted all kinds of traders, from individuals transitioning from traditional markets to those who enjoy the thrill of speculation. In fact, recent estimates of the number of spread bettors in the UK are in the hundreds of thousands.
More power to you
Avoid Capital Gains Tax
With spread bets, not only do you avoid the Capital Gains Tax placed on profits in other financial markets, but you also avoid paying Income Tax and Stamp Duty. (Tax laws may change at any time).
Pay fewer fees
Most financial instruments require you to pay a variety of charges-which might include commission, clearing, exchange, spread, government, platform and charting fees. With spread bets, the commission is built into the spread. All you pay is the low, competitive spread you see (although individual platforms may vary). Keep in mind that spread bets involve a finance adjustment, which may be a credit or debit to your account.
Seek profits in rising or falling markets
Most markets put heavy restrictions on the types of trades you can place, which means most traders can only seek profits in rising markets. With Spread Bets, you can find profit potential whether the markets are rising or falling.
Do more with your money using leverage
In share trading, you become a part owner (a shareholder) in the company or market you are trading. With Spread Bets you are just speculating on the market's value, so your money is not tied to the underlying instrument. Plus, you can trade with leverage, putting up a small amount of money to control a much larger amount. Remember, trading on leverage can magnify losses as well as profits, so you should manage risk accordingly.
Using spread betting successfully
1. Take advantage of volatility
It doesn't take much for market prices to move quickly and unexpectedly. A major (or even minor) economic announcement, a breaking news story, natural disaster, or other event can cause markets to move. Volatility can provide trading opportunities, but it can also pose significant risks.
2. Manage leverage
Leverage can help produce considerable profits as easily as it can cause substantial losses. Always keep this in mind when you trade.
3. Set proper levels
A stop is an order that becomes executable once a set price has been reached and is then filled at the current prices.
You might say that setting a stop is an art-you need to make sure that your stop is set so that your trade can handle smaller jumps and drops in price while protecting you from losing your shirt if the market doesn't go your way. A stop that's too narrow may lead you to re-enter the market, causing you to get stopped out again, which may cause more damage to your account balance than if you entered a stop that was too wide.
4. Check your emotions
Sometimes, the factor that determines how successful your trade will be isn't the amount of research you did, but your mindset at the time. As you trade, try to stay objective and calm. Even if you have a losing trade, resist the urge to enter another trade immediately just to win your losses back.
Almost every spread bet dealer offers practice accounts (sometimes called Demo or Trial accounts) - take advantage of them to test your trading strategies and learn different platforms.
6. Create a trading plan and stick to it
A good trading plan is crucial to your success as a trader. If you face trading without a plan and a rules-based approach you are simply trading by the skin of your teeth. It may seem to work for a while, but self-doubt and/or greed will ultimately get in the way of being consistently successful. The good news is that it's fairly easy to create. The following steps may help you get started.
When constructing a trading plan, ask yourself:
Will I trade only one specific market or many?
Will I trade on a daily basis or hold my positions for days or longer?
How much do I want to make?
How much am I willing to lose per trade?
If I trade on a daily basis, how many consecutive losses will I tolerate before I stop for the day?
How will I analyse the markets? Will I look at news and other events? Will I examine charts and price movements?
How will I use stops to help control my risk?
Will I have one profit target or multiple targets?
What kind of profit can I reasonably expect to gain?
Using your answers, write out a short but detailed plan of action.
Now, comes the hardest part-sticking to your plan. Try keeping a diary of every one of your trades. It will force you to follow your rules and avoid impulsive trading as much as possible.
Practice, practice, practice
Making yourself familiar with the basics of spread betting before you start is a great way to find out whether this is the right trading method for you.
Many of the Spread Betting Companies you find listed in our comparison table offer a “Demo” or “Trial” platform where you can use artificial money on an artificial market to try their platform. You can use this to practise placing trades as well as setting stop and limit orders and testing your trading plans.
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