Best Spread Betting Platform UK

Our best rated spread betting platforms in the UK, April 2024

1. IG – Best overall spread betting platform
2. Pepperstone – Best platform for trading on TradingView
3. AvaTrade – Best platform for range of assets
4. City Index – Best platform for beginners
5. SpreadEx – Best platform for customer service
6. CMC Markets – Best for platform tools
7. FX Pro – Best platform for trading on MT4/MT5

Not recommended

The following are brokers that have been moved from my ‘Best of list’, to no longer recommended. This is usually due to fees that are too high, or lack of assets for spread betting.

Markets.com

You should note that while Markets.com offer spread betting, the trading costs are relatively high.

Indeed, there is a commission involved when you try spread betting on Markets.com, as well as trading fees that are built into the spreads.

Non-trading fees are also higher on Markets.com – the inactivity fee is $10 a month after three months of inactivity, and you are required to deposit $250 when you first open an account.

FXCM

One of the great things about this broker is its social investing service, which allows you to mirror other investors’ trades.

However, there is a far lower offering of markets and products on FXCM, with just over 290 available.

The good news is that there is no commission on trades made on FXCM, though there are trading fees built into the spreads.

Also, while the minimum deposit amount is slightly lower – $50 when you first open your account – there is an inactivity fee of $50 a month after one year of inactivity. This is one of the highest inactivity fees I have come across and effectively moves this platform onto my not recommended list.

6 easy steps to start spread betting now

Now that you’ve read about some of the best spread betting brokers available to you, you’re most likely wondering how you can start spread betting in the first place.

Well, continue reading my comprehensive guide and follow these six easy steps to start financial spread betting now.

1. Open an account with a broker

First things first, you need to open a spread betting account with a broker that allows you to spread bet.

Using my list above of some of the best spread betting brokers available, you should decide which broker best suits your needs.

For example, if you think you’ll be trading large volumes of spread bets, you may want to consider spread betting platforms with a low fee structure.

Or, if you wish to spread bet with smaller amounts of money, you may want to choose a broker that offers larger leverages.

And, of course, if you have a specific security you wish to open spread bets on, such as forex spread betting, you should ensure that your chosen broker offers access to these financial markets.

When you’ve decided on the best spread betting broker for you, you may need to supply them with any relevant information to prove your identity, perhaps a recent utility bill or personal details such as your National Insurance number.

After you’ve done all this, you should be able to open your spread betting account.

2. Deposit money to your trading account

Now that you’ve opened your brokerage account, the next step is depositing money into your account.

This should be easy enough – simply choose how much money you wish to deposit and ensure it enters your account.

When you’re depositing money to your trading account, you may want to only deposit the amount of money you intend to invest.

This is because you are unlikely to earn interest on any uninvested money, and due to inflation, your savings’ purchasing power could be eroded in real terms.

3. Find a market to open a spread bet in

The next step to spread betting is deciding what spread betting instruments you wish to trade.

You will have a wide variety of different financial markets and securities to spread bet on, the volatility of which may differ.

It may be worth spread betting in areas you’re more proficient in. For example, if you’re knowledgeable about tech stocks, you may want to spread bet on a tech company.

Or, if you regularly keep track of forex markets, you may want to spread bet on currency pairs.

4. Place your order

Now, you’re finally ready to place an order.

Simply search for your chosen security, decide whether you want to open a short or long position, and select the size of your bet.

At this stage, you’ll have the choice of whether you’d like to trade using leverage. Find out more about what this means later in my guide.

5. Set up stop loss limits

Congratulations, you’re now a spread better! The hard work doesn’t stop here, though. Since many spread betting markets can be volatile, you may want to think about setting up stop loss limits to mitigate risk.

Stop loss limits are orders that will automatically close your position when it reaches a specific value. You can read more about stop loss limits later in my guide.

6. Monitor your position and close it when the time is right

Even if you’ve set up stop loss limits, you should still continue to monitor any price movements that may occur.

When you feel as though you want to cut your losses, or are happy with your gains, you should close your position.

What is spread betting?

Spread betting is a form of derivative trading that involves “betting” on the price movement of a particular security over a certain period of time.

When you spread bet, you don’t actually purchase or own the underlying asset, you’re simply speculating on how the price of the asset will move.

One of the aspects of spread betting that makes it popular with investors is leverage. This is a ratio that your spread betting broker will offer you that allows you to open a larger position on a bet for less money upfront.

How does spread betting work?

When you spread bet, you can decide to open a long position, where you predict that an asset will increase in value, or a short position, where you speculate that the asset will decrease in value.

Depending on how the value of the underlying asset moves ultimately dictates your spread betting gains, or indeed, losses.

So, let’s say you open a short position against Apple. You could stake £100 against every point of negative movement Apple’s share price makes. If Apple’s share price did indeed fall by two points, you would earn £200.

Conversely, if Apple’s share value increased by two points, you would instead lose £200.

You can use leverage on your trades

As previously mentioned, leverage allows you to gain more market exposure to an underlying asset for less money.

These leverages are usually presented to you by your spread betting broker in the form of a ratio – these can range from 5:1 to 500:1.

Say your broker offered leverage of 5:1 on any spread bets you make. If you wanted to open a £100 position against Apple, it would only “cost” you £20. This initial deposit amount is called the “margin”.

This is part of the allure of spread betting – the leverage brings the potential for greater profits should your prediction come true.

However, it’s absolutely vital that you keep in mind that leverage is a double-edged sword; not only would any profits be magnified, but so would any losses.

This is because the total profits, or indeed losses, are based on the total value of the bet, not just the initial margin payment.

For example, say you opened a short position against Apple shares for £100, and the leverage on offer was 5:1 – meaning your margin payment was only £20.

If the value of Apple shares increased rather than decreased, you would lose the full £100 for every point of movement you bet on, rather than £20 for every point.

This is how you could end up losing far more money than you initially paid in, which makes spread betting particularly high risk.

It’s worth keeping in mind that FCA-regulated spread betting brokers will typically offer a maximum leverage of 30:1 to individual investors, as these are the regulator’s rules.

Meanwhile, many of these spread betting brokers will offer higher leverages to professional customers, sometimes as high as 500:1.

This is to protect less experienced traders from losing large sums of money due to leverage.

Spreads

The spread, which, strangely, isn’t related to the “spread” in spread betting, is the difference between the buy and sell prices for a particular position.

These spreads are usually based on the market price of the underlying asset and are sometimes called the “offer and bid” price.

Typically, you will find that brokers will build the cost of a trade into these spreads, which is why it’s essential to understand your broker’s fee structure before you start trading.

Unfortunately, these spreads mean that you’ll typically be buying spread bets slightly above the market price, and you’ll be selling slightly below it.

Some brokers may offer more competitive spreads than others, so it’s worth checking the spreads they offer before you open an account with a specific trading platform.

What underlying assets can you open spread bets against?

Another aspect of spread betting that makes it quite popular with investors is the wide range of different financial markets and underlying assets you can open spread bets on.

As mentioned, you aren’t actually purchasing or owning a security when you spread bet, but simply speculating on the underlying asset. This allows you to access a wide range of markets, including:

• Stocks and shares
• Indices around the world
• Commodities
• Forex currency pairs
• Bonds.

Of course, the process of spread betting varies depending on the type of underlying asset you bet on in the first place.

For example, forex spread betting price movements may be based on currency spreads, while spread bets on commodities are typically based on the value of the commodity in question.

So, if you wanted to speculate on a particular market, such as forex spread betting, you should first ensure that your broker offers access to the market.

How are spread bets taxed in the UK?

As spread betting is considered to be a form of gambling, this affects how spread bets are taxed.

Spread bets are entirely free from Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT) in the UK. That means you don’t have to report any profits or losses to HMRC whatsoever.

Of course, if spread betting is your main source of income, you may face Income Tax.

What are the risks involved with spread betting?

As mentioned, most brokers will offer you leverage when you spread bet. While this can bring greater gains if your prediction is correct, it can also magnify your losses.

In fact, you could end up losing far more money than you initially paid in when you spread bet.

Many retail investor accounts in the UK have negative balance protection, meaning investors can’t lose amounts of money when trading which would bring them to a negative amount of money in their account.

However, it’s still essential to keep in mind that you could potentially lose all your invested money when financial spread betting, especially when trading with leverage.

Also, spread betting markets can be highly volatile at times. Sometimes, the underlying assets you’ve opened a position on can move rapidly without stopping at the levels in between.

If this happens, and you aren’t on your trading platform at the time to close your position, you could end up losing money rapidly.

Using stop loss orders to mitigate risk when spread betting

Of course, there are steps you can take to try and limit the risks your money is exposed to. One of these methods is stop loss limits. These are automated trading orders that specify when your positions will be closed.

For example, if you opened a long position against Apple, and the price at the time was £200 a share, you could set a stop order that will close your position automatically if Apple’s value falls to £190 a share.

This way, if you aren’t at your computer or can’t access your trading account and don’t notice that Apple’s value is falling, you can limit your losses.

Of course, you can always set stop orders when the price increases too. By doing so, you can catch any price increases before the value drops again. Even if the price continues to rise above your allocated stop loss limit, you may still want to consider taking your gains at this point, as you never know when the price could drop.

How is spread betting different to CFD trading?

Spread betting and trading CFDs are both forms of derivative trading, though there are a few distinct differences that separate the two.

While financial spread betting allows you to stake money against every point of movement an asset makes, trading CFDs instead gives you the difference in price from when you first opened the account.

For example, if you purchased 100 long CFDs for Apple, and the company’s share price at the time was £200, the total price of the trade would be £20,000.

Of course, you would likely only need to pay the margin since brokers offer leverage on CFDs too.

If Apple’s share price rose to £250 a share, you would make the difference between the opening price you opened your CFD, and the new price, which in this case would be £50.

This £50 would then be multiplied by the number of contracts you opened, which in this case would be 100, resulting in a total profit of £5,000.

Unlike spread bets, CFDs are typically liable to Capital Gains Tax (CGT). They are usually free from Stamp Duty, though.

It’s worth keeping in mind that CFD trading, spread bets, and other forms of leveraged trading are all fairly high risk In fact, more than half of retail investor accounts lose money when trading CFDs.

So, make sure you fully understand how CFDs work before you trade, as you are at high risk of losing money rapidly.

Is spread betting regulated in the UK?

Thankfully, many spread betting retail investor accounts are regulated by the Financial Conduct Authority (FCA).

The FCA authorises and regulates many spread betting brokers, while also prosecuting those that engage in fraudulent trading practices.

Also, spread betting brokers are required to contribute to the Financial Services Compensation Scheme (FSCS).

The FSCS covers investors up to the value of up to £85,000 should the broker cease operations or are unable to meet their financial obligations.

Is spread betting legal in the UK?

Spread betting is indeed legal in the UK. However, it’s important to note that it is illegal in the US.

Indeed, the Securities and Exchange Commission (SEC), which is the US equivalent of the FCA in the UK, does not allow US-based brokers to offer spread bets to investors.

If you’re reading this from the US and you’re still desperate to try your hand at spread betting, then there are still steps you can take to do so.

For example, as long as you open an account with an FCA-regulated broker that allows international users to access its spread betting platforms, then you can typically still make spread bets. Though, you should keep in mind that some brokers won’t accept international applications for an account, like CMC Markets, for example.

Is spread betting safe?

Spread betting is safe in the sense that it is fully regulated by the FCA, and investors are covered by the FSCS.

However, it’s important to note that there can be high levels of risk involved with spread betting, which can sometimes make it a relatively dangerous way of investing.

In fact, more than half of all retail investor accounts lose money when they spread bet, trade CFDs or take part in other forms of leveraged trading.

This is because spread betting has many similarities to traditional betting, though unlike sports betting, spread betting isn’t seen as a recreational, “once-in-a-while” activity.

Also, as mentioned, leverage can magnify investors’ losses, meaning you can end up losing far more money than you initially paid in.

The pros and cons of spread betting

Like most things involved with investing, spread betting has its own set of benefits and disadvantages that are important to keep in mind before you start making your own spread bets.

So, continue reading for a quick summary of the pros and cons of spread betting.

The benefits of spread betting

There are several advantages to spread betting, especially if you know what you’re doing beforehand.

• You can be exposed to larger bets thanks to leverage

Leverage allows investors to gain exposure to larger positions with smaller initial investments and is offered by many spread betting platforms.

This can be beneficial for those with less disposable funds since it can allow them to get greater market exposure with a lower upfront sum.

• Spread betting is fairly tax-efficient

As mentioned, spread betting isn’t seen as an investment in the eyes of HMRC, so you aren’t required to pay Capital Gains Tax or Stamp Duty on any gains or losses.

This means that, should your bet move in your predicted direction, there won’t be an excessive tax bill to eat into your profits. However, you may still be subject to Income Tax if your spread betting gains are considered to form part of your regular income.

• You can make spread bets at any time of the day

Since you can make spread bets on a plethora of different markets and securities, you can typically trade at any time of the day.

This is because, chances are, there is a market open somewhere in the world that you can make spread bets on.

The downsides of spread betting

Even though you may be raring to start spread betting by now, there are some disadvantages you should keep in mind before you try it.

So, keep reading to discover what these downsides are.

• Leverage could cause your losses to be magnified

While leverage can sometimes be a beneficial thing, it is also a double-edged sword. While your gains are magnified with leverage, so are your losses.

In fact, you could end up losing far more money than you initially paid in when you spread bet using leverage.

• Spread betting markets can be volatile

Since there are so many different markets that you can open spread bets on, some markets may be more volatile than others.

If you don’t have stop loss orders set up, and the price of a security moves quickly without warning, you could end up losing money rapidly.

• Spread betting tends to be a short-term investment method

The longer your position is open, the more chance you may have of losing money. Also, some brokers may charge you an overnight fee for holding your spread bets, meaning the longer you hold a position, the more the overnight charges could eat into your potential profits.

Therefore, it’s better to get in and out quickly when spread betting, which may not be ideal for long-term investors.

• You can’t earn dividends on spread bets

If you would prefer to invest for an income, then financial spread betting may not be for you.

This is because, since you don’t actually own the underlying asset you bet on, you can’t earn any dividends from them.

Even if you open a spread bet on a company that typically pays dividends, you won’t earn any.

Best Spread Betting Platform UK FAQs

Please note

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

CFD trading and financial spread betting are complex instruments, and more than half of retail investor accounts lose money when trading CFDs and financial spread betting. Please make sure that you know these risks before you start trading and that you’re aware there’s a high chance of losing money rapidly on your investment.