Why Compare Spread Betting Brokers?
Spread betting brokers are ten a penny, thanks in no small part to the explosion in interest surrounding the financial spread betting industry in recent years. As a result, traders now find themselves in the fortunate position of having an exhausting supply of spread brokers to choose from, each with its own unique marketing approach and trading platform. While each spread betting broker in essence performs the same basic function of enabling traders to place spread bets on various markets, they were not all created equal, and there are real tangible advantages to be had for those prepared to take the time and energy required to sift through the pack.
The first and most important reason to compare spread betting brokers and to read up on the various different options available is the legitimacy factor. While, thankfully, the majority of spread betting brokers are all above board, you can never be too careful when trading online, particularly when you're handing over real money. After all, you only have the broker's word for it that the markets are moving in the way they appear before your eyes.
Comparing spread brokers for legitimacy is actually a foundational step towards more in-depth comparisons, and you want to make sure you're operating with a broker who has a track record and is managed and regulated properly. A good benchmark is to look for FCA regulation (an essential legal requirement for UK spread betting operators), and to consult the Internet for reviews and recommendations from past customers. This might just help you discover a horror story before falling victim yourself.
Range of Markets
On a more everyday, practical note, it is important to compare spread betting brokers because some offer different markets to others, and you may well find that your choice of markets is limited with some spread brokers. Ideally, you want to be able to trade on as many markets as possible. While you will generally stick to a few core markets that you understand and can easily research, it's always better to have the option to expand your trading horizons than to be boxed in to specific markets, so comparing and contrasting the variety and extent of choice on offer is an important consideration - particularly if you're looking to be involved in financial spread betting for the long term.
An absolutely crucial consideration when choosing any spread betting broker is the cost of transacting, usually expressed in PIPs in the spread. Considering the number of transactions you'll hope to complete over the duration of your trading career, even a 1 PIP difference in price can turn out to be a huge extra burden on your trading returns.
Unfortunately, comparing prices is much easier said than done, with many spread betting brokers offering varying spreads from time to time, and offering spreads of varying degrees of severity between different markets. Comparison tables are particularly useful here for visually highlighting the comparisons between pricing structures at different brokers, but there can be no real substitute for personal legwork in finding the cheapest provider at any one time. While this can take time, sourcing the absolute cheapest provider who also ticks the remaining boxes is a worthwhile investment that will pay dividends time and time again.
Another important point of comparison between spread brokers that traders often forget is the range of functionality offered by their trading platform. While most platforms carry the same basic functions, some are far more intuitive and investor-friendly than others, and getting a feel for the system that's most suited to you can be an important help in choosing a spread betting broker. Comparing the different trading portals out there through trialling demo accounts should be an important part of every trader's due diligence processes, to provide a full picture of which broker is best suited to you.
Finally, you want to try and get a feel for the level of customer support provided by a given broker before signing up, to provide peace of mind should you ever experience any difficulties with their system or operation. A contact telephone and email for customer support is usually enough to satisfy that they actually have a support function, but some brokers have a better reputation than others when it comes to helping out their customer base.
Ultimately, choosing a spread betting broker involves finding a satisfactory middle ground between each of these key considerations. But with so many different brokers to choose from, each with their own particular specialities and shortcomings, carrying out the comparison process is an essential step in landing yourself the best possible broker.