There is a lot of poor commentary out there when it comes to spread betting.
I set up a Google keyword alert for the term ‘spread betting’ in order to keep an eye on what is going on out there.
I always knew the internet was clogged with absolutely rubbish websites – and I would say those trying to make a buck out of promoting all things spread betting have certainly contributed their share.
In this vein, one of the posts that I read today was entitled: “Only Use the Best Spread Betting Company.”
This is the first paragraph:
“If you want to earn the most spread betting then you need to use the best spread betting company. Don’t use number two or number three because remember, there’s a reason why those companies aren’t number one and the reason could be because at times they lose a lot of money. And you don’t want one of those times when they’ve done something not to earn the number one spot to cost you a lot of money. Especially if you are betting money that you need.”
Now, lets dissect this.
Firstly industry research conducted by Investment Trends (2009) shows that most spread bettors have more than one account. All spread betting companies are different, they have their advantages and disadvantages. They have different rules on different markets, different spreads and different operational practices. The astute spread bettor has found this out through experience and makes use of different companies where need be.
It is for this reason that it is hard to determine which is number one, two and three. IG Index is certainly the daddy of the UK spread betting space – but this is largely due to their age and financial clout – not necessarily their overall ability to provide spread betting services.
The second issue about ‘spread betting companies losing a lot of money’ is simply unfounded. The UK spread betting space is dominated by a number of listed providers – IG Index, Capital Spreads and World Spreads. They regularly update the markets on their performance, and trust me, they are all making a tidy profit. They are also all regulated by the FSA who has until now got it spot on when it comes to regulating this industry.
When it comes to the white label partners, such as EN Spreads, PaddyPowerTrader etc it is worth noting that these are actually the property of the bigger boys – there are some important differences in terms of marketing, information provision and customer interaction, but when it comes to the key issue of money management, risk management and platform development they are similar to their big brother.
And onto the final sentence. NEVER SPREAD BET MONEY YOU NEED. This is the first rule of spread betting, and indeed all trading. Investment comes with risks attached, and because of the leveraged nature of spread betting this rule applies even more so. Only spread bet with your surplus capital.