Spread betting trading in the UK

If you’re tempted to try shares and trading it pays to be as knowledgeable as possible.
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Published 18th Jun 2021, 11:24 BST
Using a platform to help you narrow down which spread betting broker is right for you can help, as you can see at a glance the difference between the main types and main players in the marketUsing a platform to help you narrow down which spread betting broker is right for you can help, as you can see at a glance the difference between the main types and main players in the market
Using a platform to help you narrow down which spread betting broker is right for you can help, as you can see at a glance the difference between the main types and main players in the market

The spreadbet market in the UK is a complicated place for a beginner, and not one to venture into without doing some pretty hefty market research to weigh up the real risks of losing substantial amounts of money.

Even the most basic search will tell you there are a world of rules and regulations – from different tax systems depending on the method you choose – to different levels of risk.* There is no guarantee of a decent return, and your entire outlay is at risk from the moment you start trading.

Spread betting versus CFD trading

This is a variation of Forex Trading, and there are two key things any would be investor needs to know. Start with a trading guide which explains these differences. UK investors can use two methods. CFD is the more conventional method, but spread betting does have some advantages, including potential tax advantages and more ways to make a profit compared to conventional CFD.

With both versions you are exempt from stamp duty and can access global markets, but you may be liable for capital gains tax.

It’s a complex system, whichever method you choose, and comes with a high risk of losing money. There is a profit to be had for those highly skilled, and using the right trading tools may play a part in mitigating the risk if you know what you are doing, but good outcomes are not guaranteed.

Which spread betting broker is right for my trading needs?

There can be too much choice in life. Using a platform to help you narrow down which spread betting broker is right for you can help, as you can see at a glance the difference between the main types and main players in the market.

At the very least you must choose one which is regulated by the Financial Conduct Authority (FCA) – this offers you a degree of reassurance that the business you are working with is legitimate.

Then it’s worth having a good soul search about the kind of trader you are/will be, and the talent you have. Do be proactive and informed when choosing the right fit for you, especially if you are a complete beginner. You will want a broker with plenty of advice and guidance, and which is honest about the very real risks to your capital outlay. Most should display the percentage of traders which lose money when using them – a harsh reality check, but one that any potential trader needs to consider. A site like markets.com is one of the better ones for beginners, while Pepperstone is rated by Compare Forex UK as the best FCA-regulated broker.

The website uses a variety of measurements and audience segmentations to choose its top ten brokers in the UK.

You might also want to consider fees due and platforms used when considering the right fit for you, making sure you fully understand exactly what you are committing your hard-earned cash to.

Compare Forex Brokers has more information at www.compareforexbrokers.com/best-forex-broker/uk

*Before investing in the stockmarket or currency trading it is recommended you take independent financial advice. Be aware the values can go down as well as up, and a profit is not guaranteed.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.