How to pick which spread will be better

 
Philip Salter
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WITH the news that Alpari, the global foreign exchange broker, is extending its offerings to spread betting – joining a host of other providers in a very competitive market – it’s worth considering what traders should be demanding from their providers. Start by looking at aspects of the spreads on offer as well the provider’s platform stability and mobility.

1. CHECK THE SPREADS
Brenda Kelly of CMC Markets says there is significant competition among spread betting companies when it comes to claims of spreads. She thinks “it’s always worth fully researching these claims as this is the singular most important consideration, since your potential trading will be adversely impacted by large spreads.”

“Spreads should be a consideration, but they aren’t the be all and end all, as everyone tends to be much of a muchness,” says David Jones of IG Index. If focusing on spreads, Jones thinks traders should look at things such as how likely your trade is to go through at the price offered. Jamie Blake, of Capital Spreads, agrees: “Getting the price you want is important, so find out if you’re going to be regularly re-quoted.”

Elliott Winner, also of Capital Spreads, is in favour of spread betting firms “offering fixed spreads” throughout the 24-hour period. Blake cautions: “Some companies will offer extraordinarily tight spreads, but as soon as you see any kind of volatility in a market they can largely widen out. When choosing, see if the spreads are fixed or variable, and if variable, find out what sort of expansion you’re going to see on them.”

2. GET STABLE PLATFORMS
Jones thinks the functionality of trading platforms is important. He says it has to be functional but not clunky – you want something with all the tools, but also “quick enough to execute your trades in a timely manner.” A platform’s tools are also important. Kelly notes: “Charting and a large range of the traditional and innovative technical analysis tools are the bones of any decent trading platform.” She thinks these should be free of charge and simple to utilise. Blake warns traders to be aware that some companies may charge for extras like advanced charting, while some providers will offer this free of charge.

Depth of content risks confusion, so a platform shouldn’t be too complicated, especially for neophytes. Surveys suggest that a major attribute people are looking for in their platform is simplicity, says Capital Spread’s Angus Campbell.

The best way to find the right platform is to test out the demo accounts of the various spread betting companies to see which best fits in with your style. In the same way that people will seemingly fight to death defending Linux over Windows, or Apple over PCs, there is no “best” platform for everyone. And given the innovation in this area, with companies keen to keep one step ahead of competitors, it is worth stepping back and testing the various offerings once in a while.

3. LOOK TO USE ON THE MOVE
Joshua Raymond of City Index thinks being able to trade whenever you want, wherever you are, is absolutely crucial in today’s markets – particularly when they are as highly volatile as they are today with the Eurozone sovereign debt crisis. He says “being able to keep on top of positions and react to market moves, be it getting in or out of a market, can be the difference between netting a profitable or losing trade.” As such, Raymond suggests that access to innovative and intuitive mobile trading platforms that cater for your mobile device – be it iPhone, Android or Blackberry – is hugely important.

Jones agrees: “In this day and age you should be able to access your trading platform from virtually anywhere, so I think a company’s commitment to mobile dealing and good old fashioned ‘ring someone up and deal’ is also an important one.”

4. GETTING THE ADVANTAGE
The advantage that can be garnered by using one platform over a competitor’s is vital to a trader’s experience of spread betting. The wrong company could put them off trading for life. However, as with trader’s platform shoes – common at Chicago’s Board of Trade to rise above the crowd during open outcry – whichever platform you trade with, the most important variable remains within your own control, with the trading decisions you choose to execute.