Last updated:

When you invest, you want to receive the best gains with the smallest amount of risk – which becomes possible with spread betting.

So, what is spread betting, and how can you improve your chances with the best spread betting brokers UK?

Spread Betting

Spread betting lets you invest small sums of money in return for potentially dramatic profits. Any gains are free of commissions, taxes, and stamp duty. As with CFD trading, spread betting is like a trap door that can swing in either direction.

In this guide, we’ll cover the top financial spread betting companies for speculating in 2023.

Table of Contents:


Our Top Pick of Spread Betting Brokers (UK) ๐ŸŽฐ

Considering spread betting? Before flipping the coin, when crunching your Trading Data, take time to learn your strategy and use good financial insight.

Understanding spread betting at a glance:

  • ♠๏ธ Spread betting involves short-term trading of derivatives and lets you speculate in favour of or against the market (going long or short).
  • ♦๏ธ You can leverage your position so only a fraction of the full trade value is needed to begin.
  • ♥๏ธ Your spread size is the difference between your buying and selling price.
  • ๐Ÿ‘‘ And your stake is determined by ‘points of movement.’

Service ProviderRating
*1. Pepperstoneโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
2. Capital.comโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
3. XTB Online Tradingโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
4. IGโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
5. ETX Capitalโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
6. Markets.comโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
7. CMC Marketsโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
8. City Indexโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
9. Betfair.comโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
10. Betdaqโ˜…โ˜…โ˜…โ˜…โ˜…Open Account
11. TD Waterhouseโ˜…โ˜…โ˜…โ˜…โ˜…Open Account

* Pepperstone disclaimer: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.


1. Pepperstone โ€“ Best Overall Spread Betting Broker

Pepperstone is one of the top-rated trading platforms for advanced traders working inside of a forex, CFD, and spread betting markets.

Ideal for Experienced Traders

Pepperstone suits experienced traders who already have concrete strategies and interface awareness.

For instance, this popular spread betting broker lets you trade using cTrader, MT4, and MT5 – each of these external trading platforms can sync with your Pepperstone trading account.


Pepperstone disclaimer: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.


Spread Betting Pepperstone

Customisability

Each platform gives you the professional industry-standard selection of sophisticated trading tools, customisable charts, and technical indicators. But, Pepperstone is compatible with thousands of instruments across many asset classes.

You'll find everything from stocks and shares, the forex, indices, natural gas, energies, and U.S. Treasuries (all instruments are CFDs) with Pepperstone. And, Pepperstone spread betting commissions vary according to the account type.

Commission

On the standard account, there are 0% commissions for spread bets. Every fee is batched into the spread itself. Meanwhile “Raw” accounts give you 0 spreads on the majority of markets (there is however a commission for each slide of just over £2). And funding routes are PayPal, credit or debit card, and bank transfer.

PROS

  • FCA-regulated advanced trading
  • Fund with PayPal
  • 0% commission

CONS

  • No native platform

2. Capital.com โ€“ Best Spread Betting Broker for Commodities

Capital.com is a bit of a Jack of All Trades for online trading – giving you direct access to forex markets, or an ocean of instruments through CFD or spread betting based vehicles.

This naturally means you can access thousands of markets for spread betting across most of the asset classes.

If you’re looking for tax-free capital gains opportunities through stock trading, Capital.com opens up nearly 2,500 stock markets. You won’t only get companies listed on AIM and the London Stock Exchange either, but tons of global markets too.


Capital.com Stock Market

Global Markets

You’ll be trading in a broad swathe of Europe, U.S. listed companies, Canada, and Australia. Using a forex spread betting strategy gives you a kingly selection of currency pairs of majors, minors, and exotics.

This platform is also an excellent spread betting broker for commodities. You can access commodities like oil, gold, and natural gas.

Commission

The platform is 0% commission, which means as your broker, the only trading commission you pay when executing an order is the spread itself.

Buy and Sell Offers

But there are a few final mention-worthy reasons behind why we rated Capital.com the number-one spread betting platform. Namely, every single market allows you to make a buy and sell offer – which means you can gain from bullish or bearish market changes.

Also, you can leverage your spread bet – which means magnifying each trade with more capital than your account balance. This is dangerous as it is potentially lucrative; the UK caps this at 1:30 for major pairs on forex and less for other instruments.

PROS

  • Easy stock trading
  • Apply leverage
  • 0% commission
  • FCA regulated
  • Excellent educational resources

CONS

  • Too simple for pros
  • No direct stock ownership

3. XTB Online Trading - Best Spread Betting Broker for Tools

XTB is all about challenging the market, and they provide you with a background in market analysis and education to help you get there. They have many asset classes, and they are a top choice when it comes to spread betting. They are so popular because of the wide array of capabilities and the simplicity of investing.

Customisability

Whether you’re heavily focused on things like stocks and ETFs, or more interested in CFDs, Forex, and crypto, they’ve got you covered. The trading platform is completely customizable, allowing you to set tracking and watches for your spreads.

That includes access to market order depth, as well as charts. Both of these tools are popular choices for the spread betting industry.

When using a spread betting platform, education and analysis are what you will probably focus on the most, along with the customization of your trading desk. With XTB spread betting broker, you aren’t stuck with defaults, and you can set your own markers and trackers to meet your needs. 

Reviews

This global broker is 5-star rated, and they have positive reviews from nearly 500,000 customers. This tells us they must be doing something right across the investment world. 

Commissions

XTB has always been most known for CFD choices, but they continue to advance and bring in more for their investors to take advantage of. They even allow users to trade up to £100,000 with no monthly commissions. That’s pretty impressive. 

Mobile App

If you’re into mobile apps, theirs is one of the best. They have a very intuitive desktop app, so you can do your trading on whichever device you prefer to do so. Don’t forget the demo account that lets you practice and get to know the system. 

XTB has been in the market for a long time. They are aspiring game changers, and they’re certainly impacting the spread betting industry. 

PROS

  • Relatively low fees across the board
  • Commission-free trading up to a certain amount
  • Stellar customer service skills
  • Continue to move up in the industry
  • Access to a high range of asset classes

CONS

  • No access to MetaTrader platforms

4. IG โ€“ Best Spread Betting Platform for More Markets

IG is a well-established brokerage corporation with numerous connections in the investment world. With this spread betting broker, you can get a wide range of instruments and vehicles with a single platform – including stocks and bonds, hot index funds, Forex, CFD’s, and of course, spread betting.

Market Exposure Opportunities

IG's market exposure opportunities for spread betting are also immense– more than 17,000 tradable markets. Within these markets, there is substantial variety, although IG gives the most access to shares, commodities, forex, and indexes. And, of course, you're able to go long or short with each position and apply leverage. Once again, the UK limits the top-end of this to 1:30 for UK retail investors in most cases.

Risk Level

However, if you’re a professional trader with a prerequisite account, leverage can be much greater. This currently is set at 1:222 for spread bets across commodities, indexes, and forex. IG makes it impossible to make losses that exceed your account balance, because they have the vital feature Negative Balance Protection by default.


Spread Betting IG

Commission

As for IG’s fees, it is another platform that is commission-free. All charges are siphoned up to the spread itself, which you’ll need to track – but it’s mainly on the high end of competitiveness compared to industry averages. For instance, stocks and indexes can be exchanged beginning from 0.1 points, forex at 0.6 points, and commodities at 0.3 points.

Browser and Mobile App

Finally, trading can happen directly through their proprietary platform, using the installation-free browser connection. You can also grab the mobile-first version, which works for Android and iOS. But note that the minimum account funds are to lose £250 – fund using bank transfer or debit cards.

PROS

  • Impossible to lose more than balance
  • 80+ currency pairs
  • Fully regulated trusted platform
  • 0% commission
  • Competitive spreads
  • Mobile-friendly

CONS

  • No e-wallet funding
  • ยฃ250 minimum deposit

5. ETX Capital โ€“ Best Spread Betting Broker for Micro Bets

ETX has been around since 1965 as a London-headquartered spread betting broker. The service gives you exposure to a vast number of equities (over 5,000 instruments in total). Arenas include indexes, forex, stocks and bonds, and metals and energies sectors.

The key reason to consider ETX Capital is if you want to make small bids – it’s possible to stake 10p per point for most major markets.

Risk Level

As with IG, you can protect your pockets from draining beyond the size of your account balance by using Negative Balance. However, since we last checked they only offer this for forex and CFDs – and it’s not on the table for Pro accounts, only Retail clients. So you’ll mostly need to rely on the naturally lowered risk available from staking smaller amounts.


ETX Capital Automated Expert Advisers

Commission

ETX Capital is commission free. Charges are amassed into one spread, which you’ll need to keep an eye on – but ETX is competitive according to industry averages. For instance, trading AUD/USD and EUR/USD starts from just 0.8 and 0.6 points, with competitive spreads for spread betting indices.

In fact, spread betting on stocks in Europe and the U.S. has a spread of only 0.1%. This halves for spread betting on the FTSE 100 – which is even more industry-leading at 0.05%.

Fund Transfers

Fund using bank transfer or a variety of e-wallets, the minimum account deposit is fairly small at only £100.

PROS

  • Only ยฃ100 deposit
  • Debit cards and e-wallet
  • 0% commission
  • Stake just 10p per point

CONS

  • Limited stocks and funds

6. Markets.com โ€“ Best Spread Betting Broker for Beginners

Markets.com is similar to Capital.com, in that it focuses on offering online trading to beginners.

For this reason, the interface is user-friendly and free of technical jargon, accessible without installation directly through the web browser.

Risk Level

Traders must assert caution with this platform when handling contracts for differences or spread betting – these two vehicles are what Markets.com focuses on. And pay special attention to leverage; although this is capped at UK limits, it is still very significant at 30x account funding, and these amplifiers can be roads to high instant upside as well as high instant losses.


Markets.com Pros

So we recommend initially using this platform on the free demo account, where no actual money is put at risk. You can play with spread betting mechanisms without staking any real money. You can also discover a selection of tutorials in the “Introduction to Trade” section of the website.

Commission

On that note, fees vary according to the market you are accessing. For instance, there is 0% commission on indexes, commodities, and forex – all fees are weighted under the spread. Stocks have a hefty commission of $10 for each slide. This comes into play regardless of how much is at stake – the fee is added twice to open then and close the trade.

Account Setup

Account opening is a matter of minutes via MasterCard and Visa.

PROS

  • Fully FCA regulated
  • Geared to beginners
  • 0% commission outside of stocks

CONS

  • Hefty stock fees
  • No e-wallet support

7. CMC Markets โ€“ Top Spread Betting Platform UK for Advanced Customisations

Like many other spread betting firms, CMC Markets began its career as a foreign currency broker a few years ago.

In fact, CMC means ‘Currency Management Corporation’, but now with 26 million trades each year, it is currently among the top spread betting and contracts for difference providers in the market.

Re-Quotes

It presently advertises that there are no re-quotes, which prior evaluations indicated was a problem for certain clients. The present platform, which replaced the previous Marketmaker platform, was introduced in August 2010. According to sources, it is a significant improvement.

About CMC Markets

CMC’s humble beginnings: Peter Cruddas, whose parents were porters at Smithfield Meat Market and cleaners, dropped out of Shoreditch Comprehensive in London's East End at age 16 to provide for his family, which also included his twin brother. He established CMC Group in 1989 with £10,000 after working as a Western Union technician and in different office positions in banking and brokerage firms.


CMC Markets - Spread Betting

Then… in the mid-90s, CMC began trading equities, currency, gold, and petroleum online as an alternative to conventional trading. In 2000, it introduced its web spread betting business, utilising Daily Rolling Cash. The Group changed its name to CMC Markets in August 2005, replacing all of its previous brands – including “deal4free” – with a single, worldwide brand. One of the top sources of financial data, market analysis, and corporate analysis in the UK, Digital Look, was bought by the firm in May 2007. Goldman Sachs later acquired a 10% investment in the company.

Research Resources

As for research and charting resources, the Dow Jones Newswire streams news. Find the ability to open deal tickets and trade from whatever chart you're seeing, as well as 80 technical indicators and chart kinds, is enough charting.

Thorough investigation and analysis. The company's analysts regularly post market commentary throughout the trading day to keep track of the major price movements and announcements that might affect your trading.

Account Setup

If you choose a live account, you could be dissatisfied with the spread's size. In the market today, these are not particularly competitive. The unavailability of a demo account and the problem with re-quoting were the other two grievances against CMC.

At 3% above LIBOR, rolling bet financing is a bit pricey. Even though they are futures, all wagers on this platform are handled as rolling transactions. If you are a total newbie, it is best to stay away.

Customisability

CMC's completely customizable UI may look very foreign after creating an account. It provides a demo account right now too. Good hours and spreads; however, it's hard to put up stop and limit orders.

PROS

  • Very customisable
  • Recent updates
  • 0% commission
  • FCA regulated
  • Excellent learning resources

CONS

  • Best to leave if a newbie
  • 3% above LIBOR

8. City Index โ€“ Top Spread Betting Broker for Wealthy Investors

Since it was established in 1983 by Chris Hales and Jonathan Sparke as a mechanism for corporations to use spread betting and CFDs to offset their risk, City Index has been a mainstay of the London CFD broker scene.

But it quickly gained favour with additional small-time dealers. Being constantly advertised on City billboards, having a diverse clientele, and being constantly purchased and sold at the pleasure of billionaires and larger lads.

However, it has lost some of its lustre in more recent years. When things were simpler, you could create an account and do a million-dollar deal over the line with no identification, money down, or clue.


City Index - Spread Betting

As the tale goes, you might if you were on a boat with Michael Spencer, the then-owner of City Index and a powerbroker of the City who was certain he knew which direction the Euro was heading and provoked one of his friends into making the deal.

But then those times are long gone, and established traders must work hard to stand out from the fintechs chasing them, as well as offer more trading tools to entice new clients back to established markets and away from the crypto-wild west.

However, City Index appears to have developed admirably. It has moved past its sluggish adolescence while being owned by Gain Capital and is now controlled by US Behemoth StoneX formerly known as INTL FCStone). Since then, the platform has undergone a few updates, and maybe soon, long-term investment options will be offered.

The City Index platform formerly had an off-the-shelf vibe; instead, the company depended on word-of-mouth and warm recommendations from HNW customers who would hire skilled dealers to handle huge orders over the phone. While City Index still offers phone brokerage, they are, like everyone else, conducting the bulk of their business online and putting a lot of effort into differentiating their service.

Marketplaces

They clearly have access to a variety of marketplaces, great thematic indexes (like ESG), and a wide range of industries to bet on in addition to the standard markets. A wide variety of indices and commodities are also available for trading using options (CFD or spread bets thereon). Additionally, wager on volatility; in rough markets, everyone enjoys a little vol chasing.

Trading Tools

SMART Signals is one illustration of how they're adding new trading tools to their platform. Evidently, Trading Central or AutoChartists are available from most brokerages (City has Trading Central), whose signals are utilised by so many platforms that, according to how you look at it, they nearly become self-destined, or a gun for bigger traders to mow down tiny fish.

PROS

  • Well-regulated
  • Fund with e-wallet
  • Used by wealthy investors
  • 0% commission

CONS

  • Confusing daily statements

9. Betfair โ€“ Superior Spread Betting Platform to Betdaq

Let's explore the pure sports betting territory. To evaluate sports betting, we will contrast Betfair to another wagering exchange Betdaq, and discuss all the special features bettors can use on their website.

Since Betfair has the largest markets and the greatest liquidity on its exchange, they are my preferred website for sports trading, and I have had a membership with them for over ten years. During that time, I also used their sportsbook service, and I'm happy to say that I've never experienced any problems with moving money onto or off of the website.

Sign-Up Bonus

One of the largest sign-up bonuses is provided to all new bettors at Betfair, but it only applies to wagers made on the sportsbook, not the exchange. However, it's still a great offer and one of the highest bonuses.


Betfair Exchange

Account Setup & Payment

Putting money in an account is simple once you become a member. Selecting the grey “Deposit” button at the top of the website or app will open the account's banking area. You may select the deposit method you want to use here to add money to your account.

Other options are displayed in the box labelled “Alternative Methods”, with Debit Card chosen by default. Simply input the amount you wish to deposit into the box or choose one of the default choices of £100, £50, or £25 instead. Hit the yellow Deposit icon when you are done.

For withdrawing, the first thing to remember is that you may only withdraw money from your Betfair account using your Main Wallet. To withdraw money from another wallet, such as the Exchange Games or Poker wallet, you must first transfer the money to your primary wallet. Click the My Account option when you are prepared to make a withdrawal. The next step is to enter the available balance amount you want to take out.

The reality that Betfair is much too eager to shift the expense of processing financial transactions to its clients is the first problem. Many of Betfair's deposit alternatives will cost players money when they use them, and in our opinion, Betfair needs to cover the 1.5–2% processing fees they impose on themselves.

Marketplaces

They also provide marketplaces for less common topics like politics and television shows. As their coverage attempts to be comprehensive, you may get odds for anything from the most well-known matches to the least well-known ones.

Commission

Putting aside the deposit fees, there is one more worrying problem with Betfair. They decided to increase the charge for everyone who earned more than £250,000 on Betfair to 40% and higher in July 2011. This suggests that Betfair doesn't want to recognize a good high-stakes bettor (using the platform).

PROS

  • Fantastic chances
  • Substantial welcome bonus
  • Largest betting exchange in the world
  • Competitive spreads

CONS

  • Top bonus only for non-exchange books

10. Betdaq โ€“ Top Spread Betting Platform for PvP (Other Players)

The second-largest sports betting platform in the world, Betdaq, can be compared to the largest exchange, Betfair.

If I'm unable to use Betfair for whatever reason, Betdaq is my second choice.

Unless you're a serious trader in need of a backup, I wouldn't suggest Betdaq.

With Betdaq, an automatic betting market, the bookmaker is eliminated, leaving you to wager against other players. One of our clients described it as “a punting paradise”. It is frequently used for betting arbitrage, and you may profit from the bad decisions of other bettors.

Account Setup & Payment

The site does provide a broad choice of alternative payment options for users to use when putting money into their accounts, and deposits at Betdaq are quick and simple.

First, enter your username and password to log into your Betdaq account. As of now, Betdaq requires users to finish the verification procedure before they deposit into their account, thus, if you haven't already sent in documentation to verify your identity, you will be requested to do so. Once finished, you may put money into your account and trade the financial markets using Bet Angel trading software.


Betdaq Trading Software

Choose one of the five payment options the website offers by clicking the Deposit icon in the top right corner of the page. All deposits are free of charge and should appear in your account immediately after approval. The bare minimum down payment is £10. Simply input the necessary information and the amount you intend to deposit after choosing your preferred payment method(s), then click the button to start the deposit. Now, money ought to be in your account.

If you're an extremely high-stakes bettor, you won't be satisfied with the amount of money available to back and lay on various events because the selection isn't very large. Actually, Betfair would be a superior option for the majority of exchange bettors.

Marketplace

The best use for Betdaq is as a supplementary marketplace. Rather a fallback for Betfair. There won't be an issue for events like Premier League football because Betdaq has more liquidity on larger events. You'll often find it challenging to get a substantial wager paired when you begin looking over their less renowned markets.

Betdaq just added the ability to place numerous bets on the website; while not a part of the exchange, it is a good addition, and the odds are quite attractive. It would be serviceable if they could update their 1990s-era website design.

Betdaq Exchange

At Betdaq, there's a liquidity issue. The quantities accessible to wager on key dates are a problem. Betdaq simply lacks a substantial sufficient consumer base, and unless they resolve this, they won't improve. Since many are turned off by this, Betdaq is in a pickle; for the typical exchange bettor, Betfair is simply a far better choice.

PROS

  • Fully licenced
  • Good liquidity
  • Decent odds

CONS

  • Less liquidity than Betfair
  • Outdated mobile and site design

11. TD Waterhouse โ€“ Reputable Spread Betting Broker

A notably safe and reliable organisation to use for financial positions is TD Waterhouse, a multinational corporation with more than £4 billion in assets. TD Waterhouse expects the spread bet service, which is still relatively young, to be another hit.

It makes sense that TD Waterhouse, a reputable financial firm recognised for various financial ventures, would provide an online spread betting service. It is built on the well-known and recognised City Index trading platform, which was placed in the seventh position in this guide.

However, based on customer feedback, TD Waterhouse apparently incorporated spread betting to be “complete” rather than because they were committed to it. Given that TD Waterhouse does not want its current customers to establish accounts elsewhere, they may believe that current customers prefer to try spread betting.

Research Resources

The amount of trade instruction available on the website, where spread betting appears to be more of an aside when compared to regular trading, demonstrates the absence of interest in spread betting.

Joining Bonus

It's intriguing to note that TD Waterhouse is not providing any initial incentive, especially given the degree of competition that many other spread betting brokers face. Once more, this may be motivated by a desire to offer a comprehensive service rather than a goal to draw in new spread betting clients.


TD Waterhouse

Account Setup

Upon joining, TD Waterhouse allows customers to start with lesser bets to help them get more familiar with spread betting. There are no restrictions on putting bigger bets as soon as you feel safe throughout this four-week trading period. There isn't an option for a demo account, so you can't practice without risking money.

PROS

  • Solid service
  • Good market capitalisation
  • Competitive spreads

CONS

  • Poor customer reviews in some cases
  • Nothing truly remarkable about their offerings

Top Spread Betting Brokers: Your Buying Guide ๐Ÿƒ

Let’s go over the top talking points on this topic. This section is useful for newbies who are still learning how spread betting works – also helpful when making a buying decision on the best spread betting broker to choose:


Firstly, What is Financial Spread Betting?

Spread betting uses derivative trading, which means investors don’t handle the underlying asset they bid on, such as stocks and bonds. Instead, spread bets speculate on changing market values for an asset over time, according to broker deals on offer.

As with the traditional stock exchange, there are two price quotes for spread betting – Buy price (bidding price) and Sell price (asking price).

Spread Betting bw

The difference between these price points is called the Spread, thus the name spread-betting.

Brokers who offer this service make profits directly from the spread, which cuts out the need for commissions, which is different from most securities trading.

Investors bid if they think the price will rise enough to make it worth their time or they ask if they think it will fall enough. Leverage is used, with the possibility to go long or short, some tax advantages, and broad access to the global markets. 

Key Summary:

  • ๐Ÿ”ฅ Spread betting as you trade in either direction of the market, which is tied to the fact that you do not own the underlying security.
  • ๐Ÿ”ฅ it can be tax and commission-free but is illegal in the U.S.
  • ๐Ÿ”ฅ Just as with stock trading, spread betting risks can be hedged through stop losses and take profit orders.

Example: Trading Stocks Versus Spread Betting

We can make this more concrete by giving a demonstration of trading derivatives through spreads and the process. To begin with, let’s review stock market trading, then compare it with doing the same but in a spread bet format.

Stock Market Trading

Suppose a stock market trade is made for 1000 shares in Tesco (FTSE 100: TSCO). The price rises £180, at which point we end the position, giving us a total profit of £2000, due to making 1000 x £2 profit for each share.

Please note: Those 1000 shares would have cost us £180,000, assuming they were directly purchased. In some cases, a margin could be used to reduce the capital outlay. In addition, commissions were added for opening and closing the stock transaction. The £2000 is also taxable, including stamp duty.

By comparison, spread betting on Tesco with the same figures will begin with making a spread bid at £178,000. After this, you would need to set a fixed amount of commitment per “point,” which tracks the price movements. How a point is valued can differ.

Suppose that each point is equivalent to a penny in either direction. We put in a “up there” for Tesco share price £10 a point. Tesco’s value grows from £178-£180. At £10 per penny means 200 x £10, which is £2000.

However, although the gross profit for the two examples of £2000 is equal, the net profit differs because the second example incurs no commission for opening and closing the trade, no capital gains tax or stamp duty for the UK, and a few other European countries.

There are, however, bid-offer spread fees that are significantly higher than spreads in different financial markets. This has to be made up for to return the initial investment alone.

Another key benefit is that the initial deposit is massively lower. Inverse stock-market example, £180,000 could have been needed to open the trade. Whereas spread betting could have been around 5%. Which means a far smaller deposit of £9,000 would be needed to enter into trade when using the spread betting vehicle.

This leveraged mechanism goes in either direction, of course, which means if the market goes in your predicted direction, returns are amplified; equally, if the market takes a downturn swing against your prediction, you will achieve magnified losses. So any amplified profits can be produced quickly but lost as quickly.

Here lies an advantage of stock trading over spread betting. If markets temporarily take a substantial downturn, stock market traders can wait out the market depression if they think the price will eventually swing back up. In short, there’s more autonomy. However, spread bettors may ask investors to increase account deposits or even automatically close the position.


Choosing Almost Guaranteed Spread Bet Opportunities

Arbitrage Opportunities for Spread Betting 

Spread betting arbitrage investment opportunities come when differences exist in the same financial instrument across markets or companies. This lets traders purchase these instruments for cheaper and sell them for more – all in one go. 

Arbitrage deals snoop out opportunities from market inefficiencies to get instant and guaranteed returns. Finding these points of arbitrage advantage is challenging because the information is widely accessible and well-communicated, so points of inefficiency are small. 

Nevertheless, spread betting arbitrage opportunities also unfolds when different companies take differing outlooks on the market when issuing their spreads. 

If successful, the market-maker eats up the expense when the arbitrageur makes this spread bid between two companies. Once the high end of a spread set by one firm reaches underneath the low end of the other’s spread, the arbitrageur absorbs the difference as profits.

In short, arbitration trailers purchase cheaply for one company and sell at a premium to the other. Actual market conditions are relevant to how much profit is made.

There are several different kinds of arbitration, for instance, for taking advantage of inefficiencies in currencies, interest rates, stocks and bonds, and other securities. Although it may seem in a glance that spread betting arbitrage is risk-free (guaranteed profit), there are in fact risks involved with this approach, which include transactional, liquidity, and counterparty risks.

Any slip up in the actual execution can cause substantial losses for the arbitration trader. Similarly, liquidity and counterparty points arise from market or company problems so that transactions cannot be fulfilled.


FAQs

Here are some of the questions people ask when learning more about spread betting brokers.

How to Manage Spread Betting Risks?

A few tools can be used to mitigate the high-leverage problems in spread betting. 

  • ๐Ÿ“‰ Traditional stop-losses: Stop-loss orders mitigate risks by automatically shutting down the trade once the market falls below a set price point. For instance, this could be set at 1% of your total investment capital. However, execution inefficiencies can lead to the trade closing at a lower point than the trigger, particularly if a market becomes very volatile.
  • ๐Ÿ“ˆ Guaranteed stop-loss: this type of stop-loss guarantees that your trade will close at a specific price point that you set, even if markets are very volatile. For this service, you are charged an additional broker fee.

The more sophisticated way to mitigate spread betting risks is to use arbitrage, wherein two simultaneous bets are made in either direction. 

What Does it Mean to Go ‘Long’ or ‘Short’ in Spread Betting?

Going long means a bid has been placed for the market value to grow across a certain time horizon. Going short or “shorting” is the reverse play – making a bid that the market value will decrease. 

Does Spread Betting Make Money?

Spread betting can produce dramatic profits if bids unfold as predicted. The majority of spread betters need years of trading before they develop the mastery required enough to make an effective trading system. Only a tiny proportion achieve success, and most don’t.

Is Day Trading and Spread Betting the Same Thing?

There can be a crossover, particularly if derivatives and leverage are used, and both forms of trading have results that are determined by changes in the market price (other than arbitrage spread betting, which takes advantage of executive inefficiencies). 

However, day traders normally only have the positions open for a short time, not usually overnight. Both traders can use leverage, which can magnify their gains and losses.