speadbet or broker

[nickodell]

Hi people great site seems to be a wealth of knolwege amosgst you all

im new to all this and would like to no when i start trading for real money after lots off paper trading and reserch is it better to trade with a broker as apposed to a spread betting company as you hear lots off negative stuff about spread betting .i will only have a small amount off starting capitol though realistickly 1000 GBP i do understand there is no tax spred betting but would rather pay tax than be ripped off by dodgy market manipulation etc.

 

[£10kLoser]

I would suggest you start small with a spread bet account. I use IG and Capital Spreads and have no problems with either. If and when you have learnt the ropes enough to be able to make a profit consistently, then start worrying about whether a broker might be better.

Most reports of problems with spread bets are from beginners who lose their money just as fast as with a broker. With the kind of bet size you'll be making, all trades will be auto processed with no dealer even ever seeing them.

 

[Hoggums]

Hi people great site seems to be a wealth of knolwege amosgst you all

im new to all this and would like to no when i start trading for real money after lots off paper trading and reserch is it better to trade with a broker as apposed to a spread betting company as you hear lots off negative stuff about spread betting .i will only have a small amount off starting capitol though realistickly 1000 GBP i do understand there is no tax spred betting but would rather pay tax than be ripped off by dodgy market manipulation etc.

Usually the people who complain are the ones who have lost money because the SB companies stopped them taking advantage of pricing discrepancies.

This question entirely depends on your intended trading style.

If you are looking for a quick in/out (i.e. scalping) then spread betting will only work for a short time (assuming you make money).

But if you intend to hold trades for > a few minutes then I don't see why SB should be a issue. In particular with the size of your account you won't be able to afford direct access. Just pay attention to the markets you trade and in particular how the SBs react and you should have no suprises.

You could also take a look at CFD trading if you want to avoid SB'ing.

 

[nickodell]

thanks for the advice probally will go with SB as wont be scalping , sofar been more succsessfull in longer trades on demo accounts

 

[Trader1UK]

What are some good, reliable SB companies?

 

[£10kLoser]

IG are probably the best.

 

[Paddington]

A couple of observations here:-

- benefits of spreadbetters I think exist if you have a small account which is what you propose because with many you can bet smaller amounts than the futures contract sizes. Examples are FTSE futures - £10 a point on Z U8 on Liffe, S&P futures ES U8 are $50 a point (far less risk than on FTSE as it is approx 20% of the size, ie 1300 vs 5500)

Therefore you would need to know the minimum sizes offered by the spreadbetters as I think they vary.

Ones I've come across are IG Index (most reliable platform), Finspreads (smaller bet sizes but I find their platform unreliable) and City Index

There are several negatives about spreadbetters but of course this is subject to your trading frequency and style as undoubtedly some people do make money on them

My issues with them are more about spread size as I mix trade between swing and intraday. They offer tighter spreads on intraday stuff (I'm sure you've seen the FTSE 1 and 2 point spread offers which to be fair are pretty good) BUT if you want to roll for a couple of days you get charged, or if you deal in the futures their spread is far higher (6 points on FTSE). If you're not fiddling and getting in and out that's fine but believe me you'll be less inclined to fiddle if you're got to pay 6 points each time you do it.

FTSE futures through a broker have a spread of between 0.5 and 1.5 (normally 0.5 but they do widen around some events) and you'll be charged around 0.3 points comm for a round trip so probably costs you 1 point. You can see the case for spreadbetters on FTSE for intra day here

S&P. I think the spreads here are far worse all around, but esp by the sbs. The futures market moves in 0.25 increments (a ripoff IMO but that's irrelevant) and the spread is 0.25. Through a broker you can expect to add 0.1 in commissions to get to 0.35 total.

SBs for the futures charge between 0.8 and 1.00 and for the intraday stuff they're better but I'm not sure.

My other big point is functionality. If the market is trading at 1306 and I want to stop sell 1304 or limit sell 1307 not sure I could easily do this on many sb platforms but this is easy with brokerages. Finspreads I know have a range around the current price that you're not able to use with limits and stops. I suspect that IG are better but then they charge more

Tax - a total distraction. No offence but if you're starting and turn consistenty profitable in your first 6 months then you've probably beaten 80% of the successful traders out there and only 10% or so are successful, ie you'll be amazing. Really wouldn't worry about that.

The two most popular brokerages I think are IB and tradsetation. I use IB and get on with them just fine, others love tradestation and I know that tradestation has a load of built in analytics for free. These guys are cheap and reliable and I would recommend any beginner to use these rather than SBs with the only exception noted above - if the instruments that you want to trade are too expensive for your account and you can trade smaller with a SB.

I think the rule here would be to check out the different options based around your trading style.

good luck
Pad

 

[Trader1UK]

Thanks all, great info,
Shall give some a try

 

[ofurbaldur]

IG are good.

You have not really got an option to go for a broker if you only have £1000

Broker will in almost all cases be better than a exspensive spread company.

Tax or no tax, since when do rich people have to pay tax

Baldur

 

[si1503]

I would suggest you start small with a spread bet account. I use IG and Capital Spreads and have no problems with either. If and when you have learnt the ropes enough to be able to make a profit consistently, then start worrying about whether a broker might be better.

Most reports of problems with spread bets are from beginners who lose their money just as fast as with a broker. With the kind of bet size you'll be making, all trades will be auto processed with no dealer even ever seeing them.

Ditto this.