Best Spread Betting Platforms 2021 – Public Finance International

We know that searching for a new trading platform can be overwhelming. With spread betting even more so due to the high risks that are associated with this financial investment method. 

In this article, we have listed our favourite platforms for spread betting. 

We give you a breakdown of the ins and outs of spread betting so that you can be more informed and decide if this is for you.

Best Spread Betting Platforms 2021

Here is a list of our favourite spread betting platforms. When compiling this list we considered the research and educational content provided regulation, and ease of use. 

  • Avatrade
  • Pepperstone
  • CMC Markets
  • Spread EX
  • ETX Capital
  • IG
  • Markets.com

AvaTrade

AvaTrade was founded in 2006 and is a trusted global broker. They are known for offering a plethora of trading platform options. 

The platforms they offer include AvaTrade Web Trader, AvaOptions, ZuluTrade, and DupliTrade. AvaTrade is great if you want to get into global CFD and Forex trading. 

They are regulated by multiple financial authorities like the Central Bank of Ireland. 

AvaTrade Logo

AvaTrade Logo

Pros

Cons

Fast and easy account opening process

Only offer CFDs, cryptocurrencies, and Forex trading

Free deposits and withdrawal options available

Inactivity fees

Offer amazing research tools

Pepperstone

Pepperstone was founded in 2010 and they offer a small set of tradable products. 

What makes them great is that they offer an extensive selection of third-party platforms and numerous social copy trading options. Their platforms include MetaTrader and cTrader. 

Pepperstone is a highly regulated platform. They are regulated by two tier-1 jurisdictions. This makes them a safe and trusted trading platform. 

Pepperstone Logo

Pros

Cons

Fully digital account opening

Only offer Forex and CFDs

Amazing customer service

Average news flow

Easy and fast deposit and withdrawal methods

Do not offer protection for clients that reside outside the UK or EU

CMC Markets

CMC Markets was founded in 1989 and is a well-established and trusted UK broker. CMC is publicly traded. 

A downside of this brokerage is that they aren’t available globally and do not accept US traders. 

CMC Markets offers platforms like Next Generation, and MT4, as well as a mobile app. They provide an extensive variety of financial assets like CFDs and spread betting. CFDs and spread betting are available across different asset classes.

CMC Markets Logo

CMC Markets Logo

Pros

Cons

Plethora of financial assets available

High CFDs spreads

Regulated by the UK-based FCA

Do not offer back-testing

Amazing customer services and educational content

Lack automated trading capabilities

Offer protection for client accounts

Spread EX

Spreadex was founded in 1999 and is a global forex and CFD broker. They are regulated by FCA. 

Spreadex also offers a sports betting service. 

What makes Spreadex great is that they offer traders access to over 10,000 global trade markets. This includes FX, commodities, options, bonds, indices, and shares.

Spread EX Logo

Spread EX Logo

Pros

Cons

Plethora of financial assets available

High CFDs spreads

Regulated by the UK-based FCA

Do not offer back-testing

Amazing customer services and educational content

Lack automated trading capabilities

Offer protection for client accounts

ETX Capital

ETX was founded in 1965. Much like Spreadex, they are a renowned global CFD broker. 

ETX is regulated by one tier-1 jurisdiction which makes them a safe option. What makes them great is that they offer amazing customer service. They also offer their clients access to an extensive array of tradable symbols via the ETX Trader Pro platform. 

A downside of this platform is that it lacks a robust array of trading tools and market research when compared to industry leaders. 

Pros

Cons

Free deposit and withdrawal options

High fees for CFD

Fast and easy to open an account

Only offer Forex, crypto, and CFD

Amazing educational tools

Basic research tools

IG

IG was founded in 1974 and is a UK-based CFD broker. They are regulated by FCA and the Federal Financial Supervisory Authority (BaFin), based in Germany. 

IG offers an amazing range of trading and research tools. Their educational content is also impressive. 

What makes IG great is its competitive pricing and its extensive list of tradable products.  

IG Logo

Pros

Cons

Amazing web-based trading platform

High fees for forex and stock CFDs

Brilliant educational content and tools

Limited product portfolio

Easy deposit and withdrawal options

Average customer support

Markets.com

Markets.com was founded in 1999 and is a subsidiary of the UK-based company LSE:PTEC. They are regulated by two tier-1 jurisdictions, which makes it a safe choice for low-risk forex and CFD trading. 

Markets.com’s web-based platform, MarketsX is user-friendly and is a good option for beginners. It offers a decent amount of features, like integrated research and market analysis. 

A downside of Markets.com is that it is pricey and their trading platform lacks a robust selection of trading tools when compared to industry leaders. 

Markets.com Logo

Pros

Cons

Fast and free deposit and withdrawal methods

Trading fees

Easy to open accounts

Limited product portfolio

Good research and educational tools 

Platform has limited features

What is Spread Betting?

A spread is a difference between the buy and sell prices. The buy and sell prices are linked to the underlying market price. 

Spread betting is a derivative product that you can use to wager on financial markets, like commodities, market shares, or forex. Traders can do this without taking ownership of the underlying asset. 

In simple terms, spread betting is when traders or investors place bets on whether they think the price of an asset will rise or fall. 

You should be aware that a spread bet is a complex financial instrument and comes with a high risk of losing money quickly because of the leverage. Spread betting requires a good understanding of how they work. We would not recommend spread betting to beginners. 

A major selling point of spread betting is that generally, you do not pay tax on it. This is because spread betting is exempt from capital gains tax. Spread betting is also exempt from stamp duty since traders never actually own the underlying asset. 

How does spread betting work?

Spread betting involves tracking the value of an asset so that you can take a position on the underlying market price. Traders or investors do this without having to take ownership of the underlying asset. 

  • Long and Short Trading – ‘Going long’ is a term that is used when traders place a bet that the value of an asset will rise over a certain period. ‘Going short’ is the opposite. It refers to when a trader places a bet that the value of an asset will fall over a certain period. Investors or traders do this by opening a spread bet to either ‘buy’ or ‘sell’ the underlying market. Whether traders make a profit or loss is dependent on how accurate their prediction was. 
  • Leverage – Leverage gives traders full access to market exposure at a fraction of the underlying market cost. For example, if you wanted to open a position on Apple shares, you would be required to pay the full cost of the shares upfront. With spread betting, you would only have to put down a deposit of a fraction of what the shares are worth. 
  • Margin – A margin is an initial deposit an investor will put down to open a position. With spread betting there are two kinds of margins:
  • Deposit Margin – A deposit margin is the initial amount required to open a position. This is generally a percentage of the total trade
  • Maintenance Margin – A maintenance margin is the additional fees that might be required if the position a trader has opened incurred losses that are not covered by the initial deposit. Traders get a notification (a margin call) that will request a top-up of funds. If the trader does not top-up their funds, they run the risk of having their position closed. 

How to spread bet

Spread betting is a method of engaging in the financial markets by wagering on whether an underlying asset’s market price will rise or fall. If you think an asset’s price will rise, you would open a position to ‘buy’ and if you think the price will fall, you would open a position to ‘sell’. 

When opening a position to spread bet, you are required to put up a certain amount of money per point of movement in the underlying market. Your profit or loss would then be multiplied by this amount to get the final sum. 

An example would be if you opened a spread bet at £10 per point. If you predicted that the price would increase and the price increased by 10 points, you would earn £100 (10 x 10). If the price decreased by 10 points, you would lose £100. 

A fair warning, because spread betting is leveraged, it magnifies both profits and losses since these are calculated based on the full value of the position and not based on the deposit margin.  

Benefits

A key benefit that we’ve mentioned is that its exempt from capital gains taxes and stamp duty. 

Spread betting also has the added benefit of having the potential for high earnings. 

FCA Regulation

The Financial Conduct Authority (FCA) is a financial regulatory body based in the UK. The FCA operates independently of the UK government. It finances itself by charging fees from members of the financial services industry. 

The FCA is responsible for regulating financial firms that provide services to individuals. They also maintain the integrity of the financial market in the UK. 

The FCA regulates the conduct of both wholesale and retail financial firms. They work alongside the Prudential Regulation Authority and the Financial Policy Committee. These institutions set the regulatory frameworks and requirements for the financial sector.

What is Forex Spread Betting?

In simple terms, forex spread betting is a category of spread betting. Forex spread betting entails taking a bet on the price movement of currency pairs. 

It is common practice for the company offering currency spread betting to quote two prices, the bid price and the ask price. The bid and the ask are referred to as the spread. 

With forex spread betting, investors will bet on whether the price of a currency pair will be lower than the bid price or higher than the ask price. 

Narrower spreads are attractive because the transaction cost is lower. 

Forex spread betting allows investors to wager on the movements of currencies without having to transact in the foreign exchange market. 

Leverage and Margin in Spread Betting

Spread betting works by relying on leverages and margins. Spread betting allows investors to trade on leverage to gain a larger market exposure that might not have been possible otherwise. 

Trading with leverage has the potential to increase your profits but also increases your risk of loss. This is why we would advise you to make sure you understand the risks involved with spread betting. 

A margin is the number of money traders is required to have in your account to open a position on an underlying asset. Due to the risks associated with leverage trading, traders are required to have funds in their account which can be used to protect them against market movements. 

Markets To Spread Bet On

Due to the nature of spread betting, traders are given the freedom to access a vast range of markets such as commodities, bonds, foreign stocks, and currency pairs. Here is a brief list of all the markets open to spread betting:

Stocks

Stock trading is one of the most popular forms of investing. Purchasing stock shares give investors ownership interest in a company. This gives you the ability to share in the company’s profits. 

Spread betting on stocks involves betting on the rise and fall of stock prices. Since traders don’t own any of the stock they bet on, they do not share in the profits or dividends of the company. 

Commodities

Commodities are natural resources like metal, energy, and livestock and meat. Much like stocks, commodities can be traded on market exchanges. 

The prices of commodities are affected by things like weather, livestock illnesses, and natural disasters. Traders wishing to spread bet on commodities should be aware of how commodities are priced. 

Bonds and Interest Rates

Spread betting is also available on bonds and interest rates. 

Much like with stocks, traders will bet on whether the price of a particular bond will increase or decrease and earn a profit or loss based on the accuracy of their prediction 

They are numerous bonds issued in different countries that you can bet on. 

Forex

Foreign exchange (Forex) trading is a popular trading market. Forex trades the relative values of one currency against another. 

Traders can spread bet on numerous currency pairs. As with any other spread bet, traders bet on whether the price of the currency pair will rise or fall. 

Market Indices

Instead of betting on the price fluctuations of individual stocks, investors could choose to spread bet on market indices. 

An advantage of spread betting is that investors can place bets on foreign market indices as well as local stock indices. 

Sports

Spread betting on sports works differently than general spread betting. Investors spread bet on the outcome of a sporting event. 

Sports betting offers the same variety of financial spread betting due to the amount of sports events that exist. 

ETFs

Exchange-traded funds (ETFs) are portfolios of related investment assets. Unlike mutual funds, ETFs can be traded freely on market exchanges. 

ETFs lets traders invest in a range of assets which makes them popular among investors. 

How Do Spread Betting Brokers Make Money?

Since brokerage firms don’t earn a commission on spread betting, how do they make money? Here is a brief explanation of how brokers make money on spread betting. 

One of the ways brokers make money is by categorising their clients into two categories called Book A and Book B. The clients in Book A are successful and the clients in Book B typically lose their deposits because of bad bets. 

What the broker might do is bet against the clients in Book B to take the winning side of the trade and make money. 

Another method that trading brokers might employ is making money by matching positions among clients and generating a profit from the spread. 

Trading brokers can also charge a holding fee when carrying a position overnight. 

How to Choose a Broker for Spread Betting

Here are a few things you should consider when choosing a spread betting broker:

Regulation

Spread betting is a risky business and it is important to choose a broker that is regulated by a financial firm or institution.  Regulation aids in protecting your money and assets against fraud. 

What can you Spread bet on?

Before choosing a spread betting broker, it is important to check out the variety of markets that are available for spread betting.  It is good to have a broker that offers a variety of markets if you’re an active trader. 

Costs and Fees

Spread trading can be costly and so you should check the fee structures offered by brokers. We would recommend that you choose a brokerage with transparent fees to avoid hidden costs. 

Platform

Generally, trading brokers offer platforms that are available online, via desktop, and a mobile app. We recommend you choose a broker who offers all three since it offers convenience, especially if you have a busy lifestyle.

You should also check out the trading and research tools that are offered on these platforms as this can impact your trading strategy. 

Customer Support

Trading brokers should offer customer support that is quick to respond and effective in aiding clients. 

It is common for brokers to offer live chat, email, and phone call customer support. 

Benefits and Drawbacks of Spread betting

Here are a few of the benefits and drawbacks of spread betting:

Benefits

  • Commissions are not charged on spread betting since spread betting firms earn money through the spread. 
  • Spread betting is tax-free and does not need stamp duty fees.
  • With spread betting, margin costs can be as low as 10% of the total value of the underlying asset. The rest of the funds are borrowed using leverage. 

Drawbacks

  • Spread betting can be risky due to the leveraging. 
  • It can be costly if traders decide to spread bet via day trading. Day trading can incur additional costs.
  • The price quotes of contracts can be higher than the underlying asset since they are set by a brokerage firm. 

Having Multiple broker accounts

There is no law preventing traders and investors from having multiple broker accounts. Having multiple broker accounts can be tempting. Choosing a broker can be difficult, so why choose at all? As tempting as it could be, here are some pros and cons you should consider before deciding:

Pros

  • You can enjoy all the perks of every brokerage account
  • Having multiple accounts gives you access to trade currencies of different countries
  • You can gain access to a plethora of market exchanges which is great if you’re looking to diversify your profile

Cons

  • You will need to learn the ins and outs of multiple accounts which could be an adjustment. 
  • You could incur additional costs since each broker has its fee structures
  • It will take more effort and time to manage multiple accounts efficiently 

Types of Accounts

The types of accounts available for spread betting are dependent on the brokerage and platform you choose. Account options vary from platform to platform and from broker to broker. Our advice is to do your research and choose an account type that suits your needs and trading goals. 

FAQ

Is Spread Betting Tax-Free?

The simple answer is yes, spread bets are not taxed. Spread betting is exempt from capital gains tax as well as stamp duty fees. This is because, while traders wager on the price fluctuations of assets., they do not take ownership of those assets. This negates the need to pay stamp duty.

Is Spread Betting Profitable?

Yes, spread betting can be very profitable if your predictions are accurate. If your predictions or bets are inaccurate, you will make a loss. Keep in mind that all forms of financial investment come at a risk. While you could make a pretty penny with spread betting, never risk more than you can afford to lose.

Is Spread Betting Trading?

No. With spread betting, you aren’t trading any of the underlying assets you bet on. You do not own any of the underlying assets you bet on. Instead, you are speculating whether the price of an asset will rise or fall, and making a profit or loss from your predictions. 

Is Spread Betting Better Than CFD Trading?

There is not an easy answer to this question. It comes down to what your own goals and needs are. While spread betting and CFD trading are similar, there are a few key differences. You should choose the method that works best for you. 

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