The Best Reason for Spread Betting Individual Equities

I’m quite fond of spread betting individual equities rather than the more usual indices, foreign exchange currency pairs and commodities – though I do dabble in those too.

I like individual equities for a number of reasons:

1. They are real companies doing real things, so I can have a stab at understanding them and what they actually do.
2. Their prices are lower than other financial instruments: typically two- or three-digit prices compared with the four-digit prices for indices, so I can take less risk on £££s-per-point basis.
3. There are lots of individual equities, so I have greater scope for diversifying across a number of separate holdings.
4. Some of them pay dividends which reward a longer-term spread bettor like me, whereas a currency pair or a commodity like gold does not.

But do you know what is the best reason for spread betting equities? Let me tell you…

The Best Reason for Spread Betting Individual Equities

A few years ago when the number of spread betting “brands” exploded, and before the more recent apparent Consolidation in the Spread Betting Industry, the new brands were falling over themselves to offer sign-up bonuses. It’s what encouraged me to choose white-label partners in preference to the home brands of the spread betting platform providers. (As I explained in How many spread betting accounts do you need?)

The spread betting companies’ sign-up bonuses came with conditions attached; one of which was typically that you had to open a minimum of X number of positions at £Y-per-point each, and that the allowable trades excluded individual equities.

We can speculate (pun acknowledged) about why equity trading was excluded from these promotions, but — for me — the fact that the spread betting companies were trying to discourage it is probably…

..the best reason for spread betting equities.

A Contrarian by Nature

Are you, like me, a contrarian by nature?

As a natural contrarian, I’m always wary when companies are falling over themselves to sell you something. When banks are heavily promoting structured products or fixed term bonds it’s probably a good time to avoid them. On the flip side: when you’re being discouraged from doing something, it’s probably a good time to do it.

Where to Spread Bet Equities

Some spread betting companies and fixed-odds binary betting companies make it difficult to trade specific equities by not providing markets for very many of them. If you want to cast your net wider than the usual FTSE-100 blue chip stalwarts, I have found IG Index and Capital Spreads to offer the widest ranges of equities at home and abroad.

Tony Loton is a private trader, and author of the book “Position Trading” (Second Edition) published by LOTONtech.