Best Spread Betting Platform – UK Beginners Guide

Spread betting has become very popular in the United Kingdom since it is simple in nature and tax-free. Since it is a form of betting, the profits made in spread betting are not subject to any taxation in the UK.

Though considered a great investment opportunity, beginners may find themselves confused when it comes to choosing the best spread betting platform. There are very many spread betting brokers out there and you will need to carefully review them to choose the best among them.

In most cases, spread betting may be confused with CFDs trading since it also involves speculation of prices. Nevertheless, besides speculating on the price movement, the timeframe in spread betting is predetermined. Also, the bettors either align themselves with the Ask price or the Bid price depending on their bet. Therefore, you will require to choose a reputable legit broker since your profits or losses depends on the prices and spreads that the broker offers you.

In the UK, although spread betting is considered a betting, it is regulated by the Financial Conduct Authority (FCA) rather than the Gambling Commission as other forms of betting are.

Broker

GB residents

FCA regulated

Min. first deposit

Open account

IG

YES✔️

YES✔️

£250.00

Pepperstone

YES✔️

YES✔️

$200

CMC Markets

YES✔️

YES✔️

€100

Spreadex

YES✔️

YES✔️

$5-100

ETX Capital

YES✔️

YES✔️

$50.00

City Index

YES✔️

YES✔️

0$

IC Markets

YES✔️

NO❌

$200

GKFX

YES✔️

YES✔️

$0.00

How to find the best spread betting platform for beginners: our criteria

Finding the best spread betting broker requires a thorough review of the many brokers offering the services online. However, to choose the best, you could consider the following factors:

  1. Spread – In spread betting, you will align with the Bid price if you speculate that the market will rise or align with the Ask price if you speculate that the price will fall. To break even, you will have to overcome the difference between the Ask price and the bid price, which is referred to as the spread. Therefore, the larger the spread the higher the entry cost and the more the price movement it will require to overcome it. However, with tight spreads, the entry cost is lower and it only requires a slight market movement to cover the spread.
    Nonetheless, it is also important to realise that since spread betting companies only benefit from the spreads since there are no commission charges, the bid-offer spreads in spread betting are therefore higher than in other financial markets like Forex or CFDs.
  2. Leverage – spread betting is a leveraged financial derivative. The higher the leverage offered by the spread betting company, the lower the margins and the higher the returns. However, it is also worth noting that leverage is like a two-edged sword; high leverage also means high losses.
  3. Trading portfolio – You can spread bet on forex, indices, cryptocurrencies, stocks and commodities. However, the number of instruments available for trading depends on the broker. It is important to look for a broker with a large portfolio of financial instruments.
  4. Financing cost – this is the charge on the rolling daily bets if the bets go overnight. For long bets, you will have to pay while for short bets, you will be paid. Therefore, the higher the financing cost the more expensive it would be for you is you go long.
  5. The minimum bet size – this is the minimum amount of money you bet per unit (point) of movement of the underlying market. Different brokers have different minimum bet size for different markets.
  6. Margin – Normally, this is the amount you need to deposit for any particular spread bet and it depends on the margin factor of the specific financial asset that you are betting on. The amount is usually calculated as the product of the bet size, market price (either ask price or bid price) depending on the type of trade and the margin factor.
    Margin/ (amount to deposit for a bet) = (bet size) X (Bid price or Ask price) X (margin factor)
    For example, if you intend to open a Long position on a currency pair that has a margin factor of 3.33% with 11834.4 as the Bid price with a bet size of $10, the collateral is 3.33% X 11834.4 X10 which is equal to $3940.86.
    If you were to trade without leverage, you would require $118344 to place the order.
  7. Collateral – This is the amount of balance you shall need in your account to cover potential losses. You will have to confirm the required collateral with your broker. Most brokers set this between 5% and 10 % of the margin. However, it could go up to a 100% depending on the liquidity of the financial market that you are betting on.
  8. Demo account – A demo account is always an important tool especially for beginners since it offers a platform for practising with virtual cash before investing real money. Any losses incurred in the demo account is not real; it is on virtual money. Therefore, no risks involved.
  9. Trading platforms – a spread betting broker could offer a variety of trading platforms ranging from a desktop platform, web platform to a mobile platform. If you intend to do spread betting on the go, you will have to consider a broker that offers mobile spread betting platform.
  10. Available spread bets – you should investigate to find out the type of spread bets (quarterly bets, daily funded bets, rolling dailies or binary Bets) that the broker allows its clients to use.

To help you choose the best spread betting platform, we reviewed best spread betting brokers for beginners in the UK. Below is a list of the top 9 spread betting companies:

IG: web-based platform and mobile trading spread betting broker

IG is the trading name of IG Group Holdings Plc., which is a financial brokerage firm based in London, UK. It was founded in 1974.

The broker offers forex trading, CFDs trading and spread betting.

Features

  • Regulations: Financial Conduct Authority (FCA), the Bermuda Monetary Authority in Bermuda under License No. 54814, the Swiss Financial Market Supervisory Authority (FINMA) in Switzerland, the Federal Financial Supervisory Authority (BaFin), the Australian Securities and Investment Commission (ASIC), the Dubai Financial Services Authority (DFSA) in UAE, the Financial Markets Authority (FMA) in New Zealand, the Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) in the USA, the Japanese Financial Services Authority (FSA), Monetary Authority of Singapore (MAS), and the Financial Sector Conduct Authority (FSCA) in South Africa.
  • Initial minimum deposit: $0. However, if you want to make a deposit using credit/debit cards or PayPal you will need to deposit at least $300
  • Trading portfolio: You can spread bet on forex, indices, shares, and commodities
  • Demo account: Yes
  • Deposit and withdrawal options: bank transfers, Debit cards (Maestro, Visa, Electron, MasterCard), and Credit cards (Visa, and MasterCard).
  • Trading platform: web-based platform and mobile trading app
  • Trading account: Retail account and professional account
  • Types of spread bets: Daily funded bets and Quarterly bets
  • Maximum leverage: 1:222
  • Margin factor equivalent to the maximum leverage: 0.45%
  • Minimum stake: £0.50/point

Pros

  1. There are no capital gains tax or stamp duty.
  2. It offers negative balance protection on your spread betting account.
  3. You get full exposure with a small initial deposit amount.

Cons

  1. The initial deposit required when using credits cards is quite high.
  2. The broker also has a limited option for deposit and withdrawal.
  3. The retail leverages are lower compared to professional leverages.

Pepperstone: Australian based spread betting broker

Pepperstone is the trading name of an Australian brokerage firm called Papperstone Group Limited headquartered in Melbourne, Australia.

Besides the fact that it is headquartered in Australia, the broker is also regulated in the United Kingdom by the Financial Conduct Authority (FCA).

The broker offers Forex trading, CFDs trading and Spread betting.

Features

  • Regulations: Pepperstone Limited Licensed by the FCA under License No. 684312. Pepperstone Group Limited is licensed by the ASIC under License No. 414530.
  • Initial minimum deposit: $200
  • Trading portfolio: indices, shares, currency pairs, commodities and treasuries
  • Demo account: Yes
  • Deposit and withdrawal options: Bank Transfer, credit/Debit Card, PayPal, POLi, China Union Pay, Skrill, Neteller, Broker to Broker (B2B)
  • Trading platform: MetaTrader 4 (including desktop, iPhone/iPad, Android), MetaTrader 5 (desktop), cTrader (including a web platform, cAlgo, cTrader mobile)
  • Trading accounts: Mini Account, Standard Account, and Islamic Account
  • Types of spread bets: quarterly bets, daily funded bets, and rolling dailies
  • Maximum leverage: 1:500 for FX and 1:200 for indices
  • Margin factor equivalent to the maximum leverage: 3.33%
  • Minimum stake: £0.2/point

Pros

  1. Allows automated trading of spread betting when you build your own EA.
  2. It has consistently competitive spreads.
  3. No stamp duty, No Capital Gains Tax (CGT) in the UK.
  4. Does not charge inactivity charges.

Cons

  1. Does not offer corporate accounts for spread betting.
  2. It does not offer customer support on weekends.

CMC markets: Spread bet in UK or Ireland on over 9,000 instruments

CMC markets is a European brokerage firm that offers forex trading, CFDs trading and spread betting. It was established in 1989. It is a London Stock Exchange-listed firm.

The brokerage firm has several subsidiaries operating in different countries. These subsidiaries include the CMC Markets UK plc and CMC Spreadbet plc that operate in the UK, the CMC Markets Canada Inc. that operates in Canada, CMC Markets Asia Pacific Pty Ltd that is based in Australia and operates in the Asian Pacific, CMC Markets NZ Limited Company that operates in New Zealand, and the CMC Markets Singapore Pte Ltd.

Currently, the brokerage firm only offers spread betting to UK and Ireland residents

Features

  • Regulations: CMC Markets UK plc and CMC Spreadbet plc are regulated by the Financial Conduct Authority (FCA) in the United Kingdom under license Nos. 173730 and 170627 respectively. CMC Markets Canada Inc. is regulated by the Investment Industry Regulatory Organization of Canada (IIROC).
  • Initial minimum deposit: no minimum
  • Trading portfolio: spread bet on forex, indices, cryptocurrencies, commodities, shares and treasuries
  • Demo account: Yes
  • Deposit and withdrawal options: Bank transfer, credit and debit cards
  • Trading platform: web trading platform, MetaTrader 4, and Mobile trading platform.
  • Trading accounts: standard account and professional account
  • Types of spread bets: quarterly bets, daily funded bets, and rolling dailies
  • Maximum leverage: 30:1
  • Margin factor equivalent to the maximum leverage: 3.3%
  • Minimum stake: £0.1/point

Pros

  1. It offers a robust variety risk management tools.
  2. You can spread bet on over 9,000 instruments.
  3. Offers competitive spreads.
  4. There are no charges for funding or withdrawals for UK residents using a UK debit card.

Cons

  1. The margin factor for cryptocurrencies is quite high at 50%.

Spreadex: No-MetaTrader spread betting broker

Spreadex is an online brokerage firm based in the United Kingdom that was established in 1999. The firm offers forex trading, CFDs and spread betting services.

It is a regulated broker.

Investment Trends UK Leveraged Trading Report has named Spreadex the best spread betting firm for customer support three times.

Features

  • Regulations: regulated by the Financial Conduct Authority (FCA)
  • Initial minimum deposit: $1
  • Trading portfolio: spread bet on indices, FX, equities, options, and cryptos
  • Demo account: No
  • Deposit and withdrawal options: Debit & credit cards, Online bank transfer, Wire transfer and Skrill
  • Trading platform: Spreadex wed platform, Spreadex desktop platform and Spreadex mobile trading app
  • Types of spread bets: quarterly bets, daily funded bets, and rolling dailies
  • Maximum leverage:1:200
  • Margin factor equivalent to the maximum leverage: 3.33%
  • Minimum Stake: £1/€1 point

Pros

  1. The clients can trade spread bets and CFDs from one account. Therefore no need to open two different accounts.
  2. It offers tight fixed spreads.
  3. Its trading platform is easy to use.

Cons

  1. It does not offer a demo account
  2. It does not offer the popular MetaTrader platform.
  3. Clients cannot use Expert Advisors (EAs).
  4. The broker does not offer a live chat service.

ETX capital: spread bet with the lowest stake

ETX Capital is the trading name of Monecor (London) Limited, a UK based brokerage firm listed on the London Stock Exchange.

Monecor (London) Limited was founded in 1999. In 2002 it established a derivatives trading arm and called it TradIndex. Later on, TradIndex was rebranded to the current brand name, ETX Capital.

Currently, ETX operates in the UK, Asia and Russia.

Features

  • Regulations: Spreadex is regulated by the Financial Conduct Authority (FCA) under license No. 124721. It is also a member of the Markets in Financial Instruments Directive (MiFID).
  • Initial minimum deposit: $100
  • Trading portfolio: spread bet on CFDs, forex, and crypto
  • Demo account: Yes
  • Deposit and withdrawal options: bank transfer, credit/debit cards, Neteller, Skrill, and Union Pay
  • Trading platform: ETX TRADER PRO, ETX MT4
  • Types of spread bets: quarterly bets, daily funded bets, and rolling dailies
  • Maximum leverage: 30:1
  • Margin factor equivalent to the maximum leverage: 3.33%
  • Minimum Stake: £0.50 / point

Pros

  1. Traders, spread betting profits are tax-free
  2. Traders are provided with advanced risk management and charts
  3. Traders never miss a trade with the mobile price alerts
  4. Traders can automate their trades using expert advisers.

Cons

    i. It charges a monthly inactivity charge of £25 if an account is dormant for at least 6 months until you resume trading or the account balance goes to zero.

City Index: offering spread betting for over 35 years

City Index is a subsidiary brokerage firm of the GAIN Capital Holdings, which is a Ney York Stock Exchange-listed company.

In the UK, it operates as City Index UK and it is regulated by the Financial Conduct Authority (FCA).

In 2017, City Index was awarded UK’s Best Spread Betting Service by the Shares Awards.

Features

  • Regulations: it is regulated by the Financial Conduct Authority. Its parent company the GAIN Capital Holdings is also regulated in the USA.
  • Initial minimum deposit: £100
  • Trading portfolio: spread bet on forex, indices, shares, and cryptos
  • Demo account: Yes
  • Deposit and withdrawal options: credit or debit card, wire transfer and PayPal.
  • Trading platform: MetaTrader 4, HTML5 Web Trader platform, downloadable AT Pro platform and iOS/Android mobile Apps
  • Types of spread bets: quarterly bets, daily funded bets, and rolling dailies
  • Maximum leverage: 400:1
  • Margin factor equivalent to the maximum leverage: 5%
  • Minimum stake: £0.50/point

Pros

  1. It offers tight fixed spreads.
  2. Tax-free profits and there are no commission charges.
  3. It offers real-time news from Reuter’s in-platform.
  4. In 2019 Shares Awards, City Index was voted best professional trading platform.
  5. The brokers trading platform allows traders to use multiple chart layout.

Cons

  1. Its deposit and withdrawal options are limited. There are no many electronic payments methods available.

GKFX: MetaTrader 4 –only spread betting broker

GKFX is the trading name of AKFX Financial Services LTD, an online brokerage firm based in Malta. It was founded in 2013.

It operates several websites that include the GKFX.com, GKFX PRIME.com and the GKPro.com.

To spread bet, you should use the GKPro.com website.

In the UK, it operates under GK Group, which is headquartered in London. Besides UK and Malta, the broker also operates in other countries like Germany, France, Spain, United Arab Emirates, South Africa, Sweden, Italy, China, Japan, Slovak Republic, Czech Republic, and Russia.

GKFX has a partnership with Arsenal football club of the English premier league.

Features

  • Regulations: Malta Financial Services Agency, the GK Group is regulated in the UK by the Financial Services Authority under registration No. 501320. In Japan it is regulated by the JFCA, in UAE it is regulated by the DMCC under License No. 32142, in Germany it is regulated by the BaFin under license No. 130602, in France it is regulated by AMF, in the Netherlands it is regulated by AFM, in Italy, it is regulated by the CONSOB under license No. 2915, In Spain, it is regulated by the CNMV under registration No. 71, in Sweden it is regulated by the Finansinspektionen under license No. 556873-1326, in the Czech Republic it is regulated by the CNB under license No. 256/2004 and in the Slovak Republic it is regulated by the Národná Banka Slovenska
  • Initial minimum deposit: $100
  • Trading portfolio: Spread bet on Forex, Equities, Indices, and Commodities
  • Demo account: Yes
  • Deposit and withdrawal options: Bank Transfer, credit/debit cards, Russian Post, CONTACT, Skrill, QIWI, Neteller, Webmoney and Bitcoin
  • Trading platform: Metatrader 4 (web platform, desktop platform and mobile trading platform)
  • Types of spread bets: quarterly bets, daily funded bets, and rolling dailies
  • Maximum leverage: 1:30
  • Margin factor equivalent to the maximum leverage: uses a standard lot size of £1 per pip
  • Minimum stake: as £0.10/pip

Pros

    i.

  1. It offers fast trade execution and tight spreads.
  2. It is regulated by many regulatory authorities around the world, thus making it a safe broker to invest with.
  3. Spread betting profits are tax-free.
  4. Allows traders to use a multi-chart layout on the trading platform.

Cons

  1. It is hard to locate the spread betting section on the GKFX.com, GKFX PRIME.com. it is only visible on their GKPro.com website.

Frequently asked questions

What is financial spread betting?

Financial spread betting is a financial derivative that allows you to speculate on the movement of a wide range of financial markets including forex, commodities, indices, bonds and shares. While spread betting, you do not take ownership to the underlying asset but rather speculate on the price movements.

When you spread bet, you align yourself with the Bid price if you speculate that the market price of the underlying asset shall rise or align yourself with the Ask price if you speculate that the market price shall drop. When placing the order you specify the amount of money you bet per point of the market price movement. Then if the market moves as you had anticipated, you will gain the amount of money you had bet per every point the market moves. However, if the market moves against your speculation, you register a loss of the money you had bet for every point the market moves against.

Let us take an example of spread betting on a forex pair like EURUSD with an Ask price of 11914.6 and a Bid price of 11915.2. Let’s say you speculate that the market price shall move up and you bet with $5 per point. If the broker offers a margin factor of 3.33% on that specific asset, you shall need a margin of $1983.88 to place the spread betting long order. Also if the broker requires a collateral of 5%, you shall require an additional $99.20 in your account to place the order (so your account should have a minimum of $12014.4 to place the order. However, the larger the account balance the more you could be able to hold the trade without getting a margin call.

If the price of the above asset moves to an Ask price of 11919.6 and a Bid price of 11920.2, you shall make a profit of (11919.6 – 11915.2) X 5 = $22.00.

On the other hand, if your speculation was wrong and the prices dropped to an ask price of 11913.4 and a bid price of 11914.0, you would make a loss of (11915.2 – 11913.4) X 5 = $9.00.

What are the key features of spread betting?

The key features of spread betting are:

  • Long and short positions – Long positions are opened with respect to the Bid price while Short positions are opened with respect to the Ask price. The long positions are opened if the trader speculates that the market price shall rice while the short positions are opened if the trader speculates that the market price shall drop.
  • Leverage and Margin– spread betting is a leveraged product. Therefore, the trader does not cover the whole amount required for any specific trade. He or she only requires to place some percentage of the total exposure and this percentage is referred to as the margin factor is. The margin factor varies from broker to broker and from asset to asset.
  • Bet size – this is the amount of money that a trader bets on every point (unit) that the market moves from the bet price (either ask price or bid price).
  • Bet duration – This is the duration of time that the bet is expected to stay open before being closed. However, the trader may decide to close the bet before the duration expires. The available bet durations are Futures spread bets (also referred to as quarterly bets), daily funded bets, rolling dailies and binary Bets.
    The quarterly bets are closed some times in the future every quarter (after three months). The daily funded bets are closed at the end of the trading day. The rolling dailies are allowed to remain open overnight although the trader will have to pay a small financing cost if the trade is a Long and if the trade is a Short, the trader is paid. Binary bets are loose or gain all you either loos everything or gain everything.
  • Spread – this is the difference between the Ask price and Bid price. Contrary to other derived financial products, the only charges involved in spread betting are spread. Spread betting does not have commissions.

Differences between CFDs and Spread betting?

Though there lots of similarities between CFDs and Spread betting, it is important to note that the two are different. Some of the differences are:

  1. In spread betting, there are no commission charges while in CFDs trading there are commission charges which depend on the broker.
  2. In spread betting the profit is calculated by multiplying the difference between the price at which you enter the market and the price at which you exit by your stake (bet size). On the other hand, in CFDs trading the profit is calculated by multiplying the difference between the entry price and the exit price by the number of CFD units moved.
  3. In spread betting, the margin factor is dependent on the specific financial asset while in CFDs trading the margin factor is general across the board depending on the leverage that the trader chooses to use.
  4. Positions placed in spread betting have a fixed expiration timeframe depending on the type of bet the trader chooses to use while in CFDs trading the expiration timeframe of positions is depended on when the trader chooses to close the trade.

What to look for in spread betting platforms for beginners?

As a spreadbet beginner looking for the spread betting companies UK, you will have to consider several factors.

Firstly, you will need to look for a spread betting broker that offers a demo account. The demo account will help you learn how to spread bet using virtual money thus eliminating the risk of losing your hard-earned money. The demo account also gives you a chance of learning about the spread betting platform offered by the broker.

Secondly, you will have to look for a spread betting broker that is regulated especially by the Financial Conduct Authority (FCA) in the UK. A regulated broker is safe since, in case of anything, you will have a third party institution that can follow up on the broker.

Thirdly, you should look at the minimum initial deposit required by the broker. As a beginner, it would be advisable to look for a broker who does not require too much in the initial deposit since you are still not very sure if you may not lose your entire deposit the first time.

Fourthly, the broker should have a large portfolio of financial assets that you could spread bet on.

What are the risks of spread betting?

Spread betting is a leveraged derivative and you could end up losing all your investment if your speculations are wrong and if you do not use the right risk management strategies.

Conclusion

If you are spread betting beginner looking for the best spread betting platform for beginners in the UK, you would consider choosing from the list we have provided above. The list has been obtained following a thorough review of each of the broker.

Besides, when choosing the exact broker to use, you would consider some of the factors mentioned in this review of the best spread betting platform UK.