Comparing and selecting the best spread betting broker or platform is made more tricky as there are just so many to choose from. Here, we provide some practical tips for aspiring traders to help select the right provider for you.
Open a spread betting demo account
Most reputable spread betting brokers will now offer a demo account where you do not have to put up any of your own money. You can sign-up and have a play in real-time. It is really important to give this a try as you will get a feel for the nature of spread betting as well as how comfortable you are with the interface on offer. Could you see yourself using a particular broker in the long-term? This is one way to find out.
Compared to investing where you can probably get away with a poor user interface at the expensive of a lower service cost, when it comes to spread betting, you need to be comfortable in navigating the interface of your provider – because you will be frequenting it very often due to the fast-paced nature of trading.
Education and training resources
Whether you are a spread betting novice or consider yourself to be something of an expert – there is always something to learn. The bigger providers tend to have a library of free resources to access in which you can develop your knowledge of spread betting. Some fancy videos and nicely designed guides may be up for grabs pretty easily.
Take note of minimum account opening levels
There tends to be variation in the minimum amount of funds needed to open an account. Some will require £0, some will require £200, some less than that and some more. Although as spread betting is a leveraged product (and you could lose as well as gain a lot of money), you probably should not be too focused on how much is needed to open an account and pay closer attention to the margin percentage.
Margin or amount needed to fund the trade
As a general rule of thumb, the bigger providers will tend to have lower margin requirements (i.e. the amount you have to put down to trade). This can be a blessing and a curse for newcomers – a lower margin requirement means you will borrow more and could lose much more than your original outlay! Although for those more experienced, this can be key as your return on investment can be significantly enhanced through better leverage.
Small spreads and points
Some of the important other stuff is to look out for the spreads offered – the difference between the price you can buy and sell at. Many will offer the ‘tightest spreads’ and the difference between providers is generally minimal (but be careful when dealing with the relative unknown ones). Some will also vary on the measure of points you can bet on – some may be on a 1 point basis, some may offer from a 0.5 points basis.