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Spread Betting Glossary
Spread Betting Spread betting is a tax-free method of speculating on the future movements of many financial instruments, such as stock prices, commodity prices and indices such as the FTSE 100 or Nasdaq. Unlike traditional share ownership, you can speculate and profit from movements both upwards and downwards in prices, while never actually holding the shares. Read more...
Stop-Losses Due to the volatility of some markets, a stop-loss is recommended for many types of bets. This is a level at which the bet will be automatically closed if the market moves against you. Often these levels may be subject to some 'slippage' if the market moves particularly quickly, and it is not possible for the spread-betting company to close the position in the market. Read more...
Trailing Stops A trailing stop is a moving stop that follows the price of an instrument, ensuring that any sudden movement does not wipe out profits already made - effectively locking in profits. Read more...
Leverage Leverage is a term used for trading on 'margin' or borrowed funds. Read more...
Hedging A common use for spread betting is to hedge (offset risk) in an existing portfolio. Read more...
Comparative Review: Igindex vs CMC Markets
There are some key points to consider when choosing a spread betting provider. These are especially important to the novice that may not be confident betting large sums. Here we compare the features of two of the market leaders: cmcmarkets.com and igindex.co.uk
Spread and minimum bet size:
A key consideration is the spread charged on a trade (The lower, the better). This is essentially the provider’s commission, so the more frequently you trade, the more these seemingly small differences can make a huge difference to your profit and loss sheets. Below is a selection of a random sample of bets, sampling the spreads charged, and is indicative of trades as of June 2008. These spreads are not fixed, and do differ from minute to minute, but from a quick glance at the stats we can see the CMC are the clear winner, with tighter spreads across the board in the vast majority of cases.
CMC
Markets
IG
Index
Indices
FTSE 100
Daily
2
2
3 month
3
6
6month
x
6
Minimum
stake/point
1
2
Wall
Street daily
4
6
3 month
6
10
6 month
x
10
Minimum
stake/point
1
Japan 225 daily
25
12
3 month
35
30
Minimum
stake/point
0.5
India 50 daily
x
8
3 month
x
10
Minimum
stake/point
2
Commodities
Gold
daily
0.5
0.5
3 month
x
0.8
Minimum steak/point
1
Brent
Crude daily
x
8
3 month
5
11
Minimum
stake/point
1
1
US light
crude daily
x
10
3 month
6
12
Minimum
stake/point
1
1
Wheat 3
month
3
1.5
UK Shares
Admiral
Group Plc (daily)
2.7
2.6
3 month
3.93
3.7
Minimum
stake/point
1
1
BP.l Daily
1.36
1.4
3 month
2.26
2.5
Minimum
stake/point
1
Cairn
Energy PLC daily
11.84
10.5
3 month
14.8
16
Minimum
stake/point
1
1
Datong
Electronics daily
x
5.52
3 month
x
6.22
Minimum
stake/point
5
Edinburgh investment trust daily
1.54
3.6
3 month
2.14
4.8
Minimum
stake/point
1
1
Fenner plc daily
1.36
2.74
3 month
1.74
3.23
Minimum
stake/point
1
1
Games
workshop PLC daily
x
6.28
3 month
x
6.76
Minimum
stake/point
1
Imperial
tobacco group
3.78
4.8
3 month
7.64
7.6
Minimum
stake/point
1
1
Keller
Group PLC daily
1.93
4.13
3 month
2.9
6.08
Minimum
stake/point
1
Laird PLC
daily
1.08
3
3 month
1.68
4.2
Minimum
stake/point
1
Majestic
Wine PLC daily
1.92
3
3 month
2.34
3.7
Minimum
stake/point
1
Neutrahealth Plc daily
x
3.5
3 month
x
3.5
Minimum
stake/point
x
5
Off-Plan
fund ltd daily
x
2.9
3 month
x
3.4
Minimum
stake/point
x
5
PartyGaming PLC daily
1.89
2.55
3 month
2.03
3.36
Minimum
stake/point
1
Qinetiq Plc daily
1.05
1.75
3 month
1.6
2.34
Minimum
stake/point
1
RAB
Capital Plc daily
x
4.9
3 month
x
6.3
Minimum
stake/point
x
1
Redrow Plc daily
1.2
1.2
3 month
1.6
1.7
Minimum
stake/point
1
1
Sage
group plc daily
0.57
1
3 month
0.89
1.3
Minimum
stake/point
1
1
Telford homes PLC daily
3.19
3.98
3 month
3.38
4.27
Minimum
stake/point
1
UK Coal
Plc daily
2.32
3.3
3 month
3.18
5.1
Minimum
stake/point
1
1
Vividas daily
x
2.1
3 month
x
2.1
Minimum
stake/point
x
5
Whitbread
PLC daily
3.83
4.4
3 month
5.71
6.9
Minimum
stake/point
1
1
Xstrata
PLC daily
10.2
11
3 month
16.09
13
Minimum
stake/point
1
1
Yell
Group plc daily
0.35
0.6
3 month
0.45
0.7
Minimum
stake/point
1
Zenergy Power plcc
x
6.04
3 month
x
7.52
Minimum
stake/point
x
5
Range of instruments
Having the best spreads and minimum bet size counts for nothing if your provider does not offer the market you want, so if you are trading specific instruments (especially anything more exotic than UK shares or indices), check before signing up for an account. Most providers offer trades on shares, indices, forex and commodities.
We found that IGindex offered a greater range of UK instruments, in particular more AIM listed and smaller stocks. IG also offered bets further ahead into the future, with CMC generally only offering bets to the next quarter. In particular, IG offer greater access to exotic markets and more commodities – even though the cost may be higher.
Trading platform
The trading platform is vital a consideration for many, and mostly comes down to personal preference. Both CMC and IG are relatively simple to use. These providers offer you the chance to try this out for yourself with small or ‘virtual’ bets. Both also offer research tools, such as historic graphs, and a newsfeed.
Any trading platform must be reliable and fast; There is not much more annoying than trying to stop a losing trade when a platform becomes unresponsive. Some providers have invested better than others in terms of processing power and bandwidth. We recommend opening up as many practice accounts as possible to decide which platform is the best for your trading style.
The IG index platform (PureDeal) is available only as a web app, and has a clean, accessible layout. Finding trades is intuitive, and the platform is responsive.
We were less impressed with The CMC web platform, ‘Marketmaker Web’, which we found to be less responsive and quite harsh on the eye. On a 1.5ghz dual-core laptop with 2 gb of ram, CMC caused an average of 50-60% processor usage (even with minimal watch lists open), bogging the computer somewhat, whereas Puredeal used between 10% and 25%.
Fortunately CMC also offer a downloadable client, which offers far better performance, and will suit those that trade from a regular PC.
Overall
CMC undoubtedly offer the best spreads, and many will prefer the downloadable MarketMaker platform.
IG offer a wider range of bets (including the new ‘bungee bets’), and a better web-based platform.
Due to the differences between the platforms, we feel that IG is an ideal training ground for the beginners to spread betting, and would not hesitate to recommend it.
However the more experienced trader will probably wish to progress to CMC which will offer the edge in terms of profitability.
Introductory Offers to Kick-Start your Trading Profits
Capital Spreads offer a wide variety of bets on Financial Products which include: Indices, Shares (UK & US), Currencies (FX), Commodities (Metals, Oils & Coffee etc), Interest Rates and Bonds. You can bet on the Future, Cash (which expire at the end of each day) and Rolling Daily products.
Capital Spreads really strive to keep their spreads permanently tight to give you more room for profit - Extremely competitive and most are found to be better value than most of their competitors thus giving you more opportunity to win.
Whether you're a full time professional or just starting out, it’s all about making the most of the market.
City Index, a market leading provider of spread betting and contracts for difference (CFD) trading, will help you do that with a clear, simple service designed to help you make your investment decisions.
IG Index is Britain's leading financial spread betting firm, offering prices in a huge range of indices, currencies, commodities and options, as well as thousands of individual shares. Financial spread betting has grown exponentially in the last decade because it offers traders and investors a unique combination of flexibility, speed of execution and tax-free profits.
Cantor Index is a leading financial spread betting company. Cantor Index offers spread bets on a wide range of markets from shares and indices to bonds and commodities. It has unrivalled customer services and a state of the art online betting platform, as well as a free charting package and huge resource center.
