There are a number of spread betting companies in the UK, each with their own features and unique characteristics. The UK’s top spread betting companies include:

• Accendo Markets
• CMC Markets
• IG Markets
• Hantec Markets
• ETX Capital
• SpreadEx
• AVATrade
• Spreadco
• FXPro
• City Index

Spread Betting

Financial spread betting is a method of speculating on the value of a financial instrument. In a spread bet, an investor stipulates whether the market will move up or down. Profit is then awarded on a per point basis, where the investor’s stake is multiplied by each point the market moves in the specified direction. If the bet is wrong, the loss is the stake multiplied by each point the market moves against the specified direction. Similar to CFDs, an investor does not own the underlying financial instrument being traded. This allows more private traders and investors to become involved in financial markets. While spread betting is similar around the world and across assets, numerous spread betting companies offer trading services. All offer slightly different trading packages and levels of service.

A spread bet price is quoted with two different prices: the bid (price you can sell at) and the ask (price you can buy at). The “spread” is simply the difference between the two prices. This is slightly different from the “market spread” which is the price paid if you were buying the underlying instrument directly from the market, rather than the spread betting contract. This is how spread betting companies like Accendo Markets take a fee for the trade.

An example: the price of share X is listed as 1000-1001. This means the bid is 1000 and the ask is 1001.  As an investor, you may want to take a short position at 1000 (i.e. profit if the price falls, and vice-versa), for £3 per point. If the price falls, then you close the bet and take a profit. Let’s assume that the price has fallen to 909-910. To close the position, you would buy at 910 and make a profit of £270 (1000-910 = 90; 90 x £3 = £270).  Conversely, if share x increases past 1000, then you will lose money. For instance, an increase to 1099 -1100, will result in a los of £300 (1000-1100 = 100; 100 x £3 = £300).  Spread betting companies like Accendo Markets provide a price to investors based on the underlying security’s market price. Spread betting companies include costs in the bid-ask spread, which is how they themselves make a profit.

Most spread betting companies offer stop-losses to investors. At Accendo Markets, we’ll provide you with automatic trailing and guaranteed stop-losses, invaluable risk management tools not offered by all spread betting companies.  A stop loss will automatically close the position if the market moves against you by a pre-specified amount. A limit order, or “take profit” order will close the bet when the market reaches a pre-specified level, as chosen by you.  There are many spread betting strategies, including momentum trading, the average directional index (ADX), scalping strategies and price action strategies. Unlike some spread betting companies, Accendo Markets will assist in finding the right trading strategy for you.

The advantages of spread betting are numerous, including:

• Tax advantages for UK residents, including exemption from capital gains tax*
• No stamp duty
• No broker commissions (although spread betting companies make their money from the ‘spread’)
• Able to go “short” or “long” and bet on whether your chosen market will increase or decrease in value
• Wide variety of underlying instruments available to trade, including commodities, market indices, shares, interest rates, etc.
• Can be traded at any time of the day because it is an OTC instrument. This of course depends on liquidity, and as the underlying instrument may be based in a market that is closed, the spread may vary.
• While there are different timeframes available, the length of trade is determined by you as the position can be held for as long as necessary.
• Able to choose desired stake size.
• Able to trade on margin. This means you are only required to deposit a minimal amount to begin trading.
• Many use spread betting to learn to day trade.

The market is highly regulated. In the UK, all spread bets and spread betting companies are regulated by Financial Conduct Authority (FCA).

Despite these advantages, there are also numerous risks associated with spread betting. Spread bets are leveraged products, and losses can exceed the initial deposit if the market moves the opposite way to that which you expected. However, risks can be managed by close monitoring, and through stop and limit orders. Understanding your chosen market is important in minimising your risks. Spread betting companies differ in how they help investors understand these risks. At Accendo Markets, we’ll provide you with education, training and a dedicated trader on call to assist you.

Spread betting companies, including Accendo Markets, offer both the opportunity for you to utilize the advantages associated with spread bets and mitigate associated risks. Through the spread betting demo and live platforms, Accendo Markets will give you access to companies in multiple markets, including the ASX and S&P 500, Nasdaq 100, S&P 500, and more. Various currencies, indices and commodities are also available through Accendo’s on-line trading platforms, including but not limited to: US crude, Natural Gas, Gas Oil, US Unleaded Gasoline, Aluminium, Copper, Tin, Zinc, Wheat, Cotton, and all major currencies.

What Can We Offer You?

Accendo Markets, unlike other spread betting companies, will give you access to a huge range of markets as well as comprehensive research and personal service. Part of this personalised service includes close monitoring and trade help, which may help you perfect your trading strategy and help keep you ahead of the markets with timely news flow.

Accendo Markets believes that many spread betting companies have lost the ability to work closely with clients, and to listen and adapt to what investors and traders need to succeed. Personalized services from Accendo include alerts, tutorials and research. Research includes trade ideas, analysis (with a technical focus), risk management, macro events and daily commentary, encompassing all asset types. All reports are created for you by our in-house market analysts. If you are looking for further information on a topic or something very specific about a company, our analysts and traders will be able to provide information at your request.

In addition to services offered, spread betting companies should be compared according to margin requirements, spreads available, minimum trade size, minimum account size, trading availability and access to a demo account.  Accendo Markets provides trial accounts in all of the instruments it offers, so that investors can make sure they understand and want to trade in these products. Web based platforms and mobile platforms also ensure optimum market access.

Regulation

In terms of regulation, spread betting companies in the UK are authorised and regulated by the FCA. Client’s money must be held in a separate bank account, ensuring it is kept separate from the firm’s money. Accendo Markets partners with the biggest clearing houses in the country, so you can trade with confidence.

*CFDs and spread betting are not subject to stamp duty, under current UK law. Profits from spread betting do not incur capital gains tax in the UK. Tax law can change.