The Long-Term Spread Bettors Wish List

When you look to open a new spread betting account, what do you look for? Is it the things that the spread betting companies usually shout about like tight spreads, fast execution and no re-quotes? As a day trader those things might be important to you, but for a longer-term spread bettor like me those criteria are not so important and there are other things to look for in your new spread betting account.

Why the usual criteria don’t matter (much)

Tight spreads are nice because no one wants to see the value of their position fall “on paper” for no good reason as soon as the trade is opened. While I can’t ignore this criterion completely because I’m prepared to close a position quickly if it goes the wrong way, in the context of holding on for multi-bagging potential over the long term it really doesn’t matter too much how many points there were originally between the buying and selling prices.

Fast execution and no re-quotes are nice, and I have to admit how much it irritates me that City Index in particular usually insist on referring my trades to a dealer and then giving me just a few seconds to accept a quote. But in the grand scheme of a longer-term spread bet portfolio it’s more of a minor irritant than a major showstopper.

The usual much-touted features seem to be designed to encourage dipping in and out quickly as a “day trader”; which is fine if you want to do it, but don’t let the spread betting companies bully you into becoming a day trader. There is another, more considered and longer-term approach for which the desired criteria are somewhat different.

The Long-Term Spread Bettor’s Wish List

Here follows my “wish list” of four items that most appeal to me as a longer-term spread bettor, with a few more “nice to haves” thrown in at the end. Some spread betting companies already meet my needs in these respects, but with some it’s still wishful thinking.

The Long-Term Spread Bettor’s Wish List

Here follows my “wish list” of four items that most appeal to me as a longer-term spread bettor, with a few more “nice to haves” thrown in at the end. Some spread betting companies already meet my needs in these respects, but with some it’s still wishful thinking.

1. Wide range of equities: As someone who predominantly trades equities for their longer-term potential it is important to me to have access to a wide range of individual equities. Some spread betting companies offer a surprisingly narrow range, and I have found the widest range of equities to be offered by IG Index and Capital Spreads.
2. Advanced stop orders: Although I use guaranteed stop orders only when I really have to, sometimes they are useful for protecting my account against the unexpected fall of a single oversize position. And although I prefer to trail my stops manually, there may be some longer-term trader-cum-investor types who have neither the time nor inclination to lock-in increasing amounts of profit by revisiting their stop orders… so for them, an automated trailing stop facility may be useful. Guaranteed and trailing stop facilities are provided by IG Index, Capital Spreads and Work Spreads (plus some others).
3. Ability to see all-time P&L: My three favourite spread betting companies — can you guess which ones they are? — all show the P&L on each position since the position was first opened, whereas one of the other popular spread betting companies (okay, it’s City Index) shows only the current day’s P&L. I’m not that interested in how much profit or loss I made “today”, because for me it’s a marathon not a sprint.
4. Low minimum stakes: Because I establish exploratory position is a large number of individual equities, the ability to bet with small stakes (initially) is important to me. Many spread betting companies apply an across-the-board minimum trade size of £1-per-point. Some including IG Index, Gekko Global Markets and City Index allow fractional bets as low as £0.10-per-point on at least some of their markets. The worst offender in the minimum stakes stakes (it’s a pun, not a grammatical error) has to be Spread Ex and their minimum “web stake” of £25-per-point on many markets.

There are some other “nice to have” criteria on my wish list, like low financing charges on long-term rolling spread bets, but now that Shorts & Longs has been folded into the parent company SpreadEx, I don’t think there are any remaining spread betting companies that levy extortionate financing charges in the current low interest environment.

It’s a bonus to be able to see stop levels in your list of open positions rather than having to click through to a different screen, and this is where Capital Spreads (but not its platform-sibling Trade Fair) falls short of IG Index.  Here we give a comparison of the different features provided by IG Index and Capital Spreads in more detail.

I’m getting more and more interested in accessing my spread betting accounts on the move via my Android phone, and in this context the IG Index Android App is ahead of those provided by Capital Spreads and CityIndex in terms of stability as well as functionality.

And Then There Were Three

I do like to diversify across trading accounts as well as across markets. You never know when a particular trading platform will stop working just when you need it, or they won’t have a particular market on offer. But really, the number of separate accounts I currently have has become unmanageable.

If I had to rationalise my live accounts down to just three, and I might, then based on my “Long-Term Spread Bettor’s Wish List” they would be (in this order) IG Index followed by Capital Spreads. I might throw in City Index mainly for nostalgia and because they are one of the big players rather than a “white label” brand, but otherwise they don’t really meet my criteria.

Your criteria may be different from mine, and you may welcome the much-publicised day traders’ criteria of tight spreads, fast execution and no re-quotes. Ironically, my three chosen accounts are some of the best in those respects too!

Tony Loton is a private trader, and author of the book “Stop Orders” published by Harriman House.