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Financial spread betting companies

No site about financial spread betting would be complete without a review of all the financial spread betting companies, their products and services, how they try to differentiate themselves in the spread betting market, and most importantly which is the best spread betting company and why! Whilst it is vital that you understand all the aspects of spread betting, the potential risks and rewards, it is also equally important that you choose the best spread betting company for your own trading strategies. This does not simply mean one that offers the tightest spreads, or one that is currently offering an incentive to open an account – after all spread betting offers come and go all the time, and there will always be another along soon! Of far more importance in my view at any rate is to try to find companies that offer something that is unique or creative,  or a product that will suit your style of trading. A spread betting demo account is vital ( not all spread betting companies offer this as an option, believe it or not, so always check this first), as it allows you to check the trading tools, news feeds, and charts, as well as get a feel for the company and its customer support – after all it they can’t provide a decent response to your questions as a potential spread betting client, then there is little hope this will improve when you finally open your account. If the company offers a telephone dealing service, call it, just to see how long they take to answer a call, and try calling when the markets are open and likely to be busy – you may be surprised at how long it takes to get through, and when you do simply apologise and put the phone down!

As well as looking at the spread betting platform in detail, check all the market specification data which should be freely available on the site. This will give you all the information you need on the markets covered, the minimum spreads, maintenance margin and initial maintenance margin details, financing costs, contract types and market hours – in short all you need to know. In addition, check the spread betting firms trading hours – many now offer 24 hour dealing throughout the week which may be important to you if you are planning to trade the Far East markets, or if you are not based in the UK.

Another key area to check is that of the order types offered by your spread betting firm, and the costs of these orders. Simple stop loss orders will normally be free, but of course are not guaranteed and as such in volatile markets your position may not be closed at the requested level. Guaranteed stop loss orders on the other hand do, but will come at a price so check this carefully, although it is interesting to see that one spread betting company which we will review shortly is now offering this order type free, a great option in my view. In fact whilst discussing order types, one spread betting company now include this automatically on every order, as well as ring fencing a portion of the trade to cover the position. Whilst some traders consider this a ‘big brother’ approach to spread betting, I do not, and view it as a creative solution to the risks associated with financial spread betting, protecting new traders from themselves!

Finally, do check that the spread betting company you propose to use has a solid track record and is regulated by the Financial Services Authority which  now regulates the industry. I have included the link here so you check this for yourself. Most of course are, and are in fact owned by large organisations some of which are quoted on the London Stock Exchange, but there are smaller players in the market, some of whom are Irish companies and therefore fall under a different regulatory body which in this case is the Financial Regulator. Remember that for any UK company you will be covered under the Financial Services Compensation Scheme, which guarantees you are covered for the first £30,000 in full and thereafter 90% of the next £20,000, making a maximum payout of £48,000 should the spread betting company go bust. The Irish scheme is less generous and will usually cover you up to around 20,000 euros, although this is not a guaranteed scheme such as that with the FSA, so this is an important point to consider, particularly if you are considering one of the smaller financial spread betting Ireland based organisations.

Last, and by no means least, do sign up with a financial spread betting forum, ( or more than one) which will give you an insight into the good, the bad and the ugly of the spread betting industry. You do have to take some of the criticism with a pinch of salt, but there are positive comments as well which should give you a good feel for the market in general and financial spread betting companies in particular – but do read between the lines – there are a great many aggrieved losers out there who like to vent their spleen in the forums!

So these are the basic issues when choosing  from the plethora of financial spread betting companies – let’s look at the list in detail and I will try to highlight the key points in my financial spread betting review.