Looking for the best forex spread betting brokers in 2020 and beyond? We’re here to help. We compare all the top forex spread betting brokers, giving you the information and guidance you need to make the right decisions and trade like a pro.
Our guide to forex spread betting brokers takes you through all the key criteria you need to know when picking a broker, with a focus on regulation, design and ease of use, and fees.
Where can I find the best forex spread betting platforms?
Right here! Our website enables you to search and compare the best forex spread betting platforms, listing all the most important selection criteria at a glance. The most desirable platforms are regulated by top regulatory agencies, provide intuitive platforms that make it easy to open an account and make deposits, and help you make exactly the kind of forex spread bet you want to.
What are forex spread betting brokers?
Forex spread betting brokers are companies that provide retail traders with access to online and app-based platforms that allow them to bet on the price movement of pairs of currencies. The best brokers’ platforms are easy to use, well regulated, and carry strong reputations acquired through years of steady operation and stellar customer service.
What is forex spread betting?
Forex spread betting is an investment vehicle that lets you speculate on the movement of pairs of currencies, without actually transacting in the foreign exchange market.
Spread betting, which can be done for forex or other markets, consists of three main components:
- The spread of the instrument being traded
- The direction of the trade, up or down
- The size of the bet made by the trader
A broker offering currency spread betting usually provides two price quotes, the bid and the ask. The gap between the bid price and the ask price is called ‘the spread’. Traders bet on whether the price of the currency pair will be lower than the bid price, or higher than the ask price.
For traders, the narrower the spread is, the more attractive the currency pair becomes for spread betting. That’s because narrower spreads mean lower transaction costs for traders wanting to enter and exit a trade.
Let’s use an example to illustrate how forex spread betting works:
Say a broker quotes you an ask price of 1.1155 on the EUR/USD (Euro/U.S. Dollar) pair, with a bid price of 1.1150. If you think the euro will strengthen compared to the dollar, you could bet €0.5 for every point (also known as a “pip”) the euro rises above 1.1155. If the EUR/USD pair climbs to 1.1165, you would earn a profit of €5 (€0.5 x 10 pips). If the price of the Euro instead falls to 1.1145, you would lose €5.
The better you get at forex spread betting, the more you might consider using leverage when making your trades. Leverage allows you to borrow money from the broker to place bigger bets than you would normally be able to make using your own money alone.
How do forex spread betting platforms work?
Forex spread betting broker platforms enable clients to buy or sell commodities either online or via a mobile app. Simply open a forex spread betting account, deposit funds, and you can start betting on the price movement of currency pairs. Just remember: the smaller the spreads you can find on a given platform, the lower your transaction costs will be.
So I don’t technically ‘own’ the assets I’m trading on a forex spread betting platform?
Technically, no, you don’t own the assets; however this is normal. In the same way that spread betting on commodities doesn’t require you to actually own any of the commodities whose price movement you’re betting on, forex spread betting doesn’t require you to own any of the currency pairs whose price movement you’re betting on. You will, however, have to have money in your account in order to make trades. The currency you need usually corresponds to wherever the spread betting service you’re using is located. For instance, a spread betting site in the United Kingdom would require British pounds (GBP) as capital.
What should I look for in a broker service?
When shopping for the best forex spread betting trading platform, it pays to do your homework and find the platform that checks as many of the boxes below as possible:
- Find a regulated platform – The Financial Conduct Authority (FCA) regulates forex brokers in the United Kingdom. If you’re not in the UK, check to make sure the broker you’re using is regulated.
- Good reputation – The best forex spread betting brokers should come with positive user reviews regarding such key criteria as opening trading accounts and seamless funds withdrawal. Awards, accolades, and positive publicity can also be useful markers when gauging a platform’s reputation.
- Design and ease of use – You want a platform that makes forex spread betting as quick and easy as possible. Firstly, because you don’t want to get confused and make the wrong trade. And secondly, because you’re betting on the very narrow windows between the bid and ask prices of currency pairs, making pinpoint accuracy essential.
- Analysis tools – Forex spread betting requires diligent analysis and tremendous discipline. The best trading platforms will offer advanced technical analysis tools to assist in key areas such as pattern recognition.
- Customer service – If you’re an active trader, you’ll want to be sure you’re well taken care of on whichever platform you choose. That means insisting on live-chat capabilities 24 hours a day, seven days a week, and longer queries taking no more than one business day to produce a reply. Testing the broker’s customer service before depositing a large sum of money is a good idea.
- Fees – This one is simple: The lower the spread-based transaction fees you have to pay, the better off you’ll be.
Will I have to verify my broker account?
Yes. You need to verify your account to comply with financial service regulations. Verification will usually involve providing proof of identity, proof of address, and various financial proofs. This is often an automated process that will require you to upload documents such as a valid passport or driving license, bank statement or mortgage statement. In some cases, you might be required to take and upload a selfie too, for facial recognition purposes.
Is online trading secure?
Yes. Reputable forex spread betting brokers use many of the same digital safeguards that you’ll find in a typical stock account run by a big brokerage to guard against hackers. Regulatory agencies provide further security by closely monitoring forex trading in places like the UK, as well as many smaller nations.
What if I forget my password?
Just like other online platforms, forex spread betting accounts allow you to reset your password using your email address and/or password recovery questions. Make sure to choose a secure password (ideally using non-common words, at least one capital letter, at least one digit, and at least one punctuation mark), so that others can’t access your account.
Can I trade multiple currency pairs on spread betting brokers?
Yes. The seven major forex pairs are:
- The Euro/US Dollar Pair (EUR/USD)
- The US Dollar/Japanese Yen (USD/JPY)
- The British Pound Sterling/US Dollar (GBP/USD)
- The US Dollar/Swiss Franc (USD/CHF)
- The Australian Dollar/US Dollar (AUD/USD)
- The US Dollar/Canadian Dollar (USD/CAD)
- The New Zealand Dollar/US Dollar (NZD/USD)
However, many spread betting platforms will let you bet on the price movement of 60 or more currency pairs.
Do spread betting brokers charge fees for trades?
Yes. Forex spread betting brokers make money through the spreads they charge clients to trade, both when entering and exiting a trade.
What are the advantages of using a forex spread betting service?
Forex spread betting platforms bring together all of the world’s biggest currencies and currency pairs. Some of the advantages of making forex spread bets through brokers include around-the-clock market hours, high liquidity, and the ability to make trades using leverage. Trading on leverage refers to borrowing money from the broker to make bigger bets, which in turn net bigger profits when you successfully predict which way a currency pair is going to move.
And what are the drawbacks?
Forex spread betting typically takes experience and significant attention to detail to do well. Also, buying any asset using leverage, be it foreign currencies, commodities, stocks, or others, comes with increased risk. If you bet wrong, you’ll owe a lot more than you would had you only invested your own money.
Should I use a forex spread betting platform?
That depends on your goals, and your risk tolerance. One way to mitigate risk is to implement stop-loss orders. With a standard stop-loss order, the order will close out your trade at the best available price once the set stop value has been reached. Meanwhile, a guaranteed stop-loss order guarantees to close your trade at the exact value you have set, regardless of the underlying market conditions. Guaranteed stop-loss orders typically incur an additional charge from your broker.
You can also mitigate through the use of arbitrage, which is betting two ways simultaneously. Arbitrage lets investors exploit the difference in prices between two markets, specifically when two companies offer different spreads on identical assets.
Is online forex spread betting legal?
That depends where you want to do it. In the UK, forex spread betting (and every other kind of spread betting) is considered to be online gambling. That makes the practice tax-free in the UK, but also makes it illegal in the United States, because gambling laws are much stricter in the U.S. Review the laws on spread betting wherever you live before.
Can I transfer from a forex spread betting account into my PayPal account?
Yes, forex accounts will usually allow deposits and withdrawals to and from PayPal accounts.
Can I use a forex spread betting platform on my mobile phone?
Yes. Most forex spread betting platforms allow you to trade foreign currencies on easy-to-use mobile apps.
Is using a forex spread betting platform anonymous?
No. You must go through a thorough identity verification check to sign up for a forex spread betting account.
Are there minimum and maximum deposit/withdrawal amounts?
Many forex spread betting brokers allow a very low minimum deposit or even no minimum deposit. Withdrawal minimums and maximums will vary by broker, but it’s not uncommon to find minimum withdrawal amounts of £50 or the full available account balance, whichever is less. Likewise, maximum online withdrawals are sometimes capped around £20,000 in one transaction, though again, you’ll want to peruse the limits on different brokers to find out for sure.
Is it possible to short on forex spread betting platforms?
Yes, it is possible to engage in both short and long selling when engaging in forex spread betting, depending on which way you see the price of a commodities contract going.
Can I access my full trading history on a forex spread betting platform?
Yes. On a forex spread betting platform you’ll be able to see a complete list of all your past bets.
Is it easy to switch forex spread betting brokers?
Yes. You are not contractually obligated to stay with any one platform, and you can switch as you please. If you’re trying to gauge which platform is best for you, you can even start by trading on multiple forex spread betting platforms at the same time, until you decide which one you like best.
Can deposits be made in cryptocurrency or just fiat currencies?
It is possible to find forex spread betting platforms that accept deposits in cryptocurrency. But despite the growing acceptance of cryptocurrency around the world, many platforms still require that deposits be made in fiat currency (GBP, USD etc.).
Do I have to pay tax on any profits made through forex spread betting?
Forex spread betting profits are not taxed in the UK, and are thus 100% tax-free. Taxation laws can vary by country, though, so be sure to consult with your country’s tax laws before opening an account.
Are forex spread betting platforms regulated?
In the UK, forex spread betting platforms are regulated by the FCA. Do your research when shopping for a forex spread betting platform, and try to choose regulated platforms if possible.