The spread
In trading, a spread is the difference between the ask (offer) and bid (sell) prices of an asset. When trading, the bid-offer spread is crucial in determining the price of ETPs, spread betting, CFDs, barriers and vanilla options.
As a trader, you can use the bid-offer spread to gauge an asset’s supply and demand in the market. A tight market can be identified through bid and offer prices that’re close to one another, meaning buyers and sellers have consensus, more or less, on the asset’s worth. On the other hand, a wider spread indicates a difference in opinion by buyers and sellers on the asset’s worth.
A spread will thus be used by most brokers when quoting asset prices. This means the asset’s buy price will always be slightly higher than the underlying market and the sell price slightly lower.
Trading costs
When trading with an online broker, there are costs you must be aware of. While creating an account is usually free, there are some charges involved when opening and closing positions. Some direct costs you can expect include the spread (as mentioned above), commissions or overnight funding charges.
The charges you pay depend on the type of trader that you are – for example, day traders won’t pay overnight funding if they open and close their positions in a single trading day. Factors that may impact the cost of your trade are the margin, slippage and, if you’re a professional client, volume-based rebates.
Commission rates
Trading commission rates often differ from one broker to the next, so it’s one of the aspects to consider when choosing an online broker.
When trading ETPs, all trades will be commission-free if the notional value of the trade is more than €300.2
Meanwhile spread betting is always commission-free regardless of trade size.
Commission rates will also influence the costs when trading CFDs and options. There’s often a commission payable in the case of share CFDs, which is a direct charge you’ll have to pay. CFD trades on other markets, however, have no commission – instead, a spread is wrapped around the market price of an instrument.
With options, a commission is charged per contract at opening and closing. You should also consider the option premium and knock-out premium as costs to using barriers and vanilla options.
Trading hours
When you can trade will have quite an impact on which online broker you choose. We offer extended hours on certain markets, such as major stocks (Apple, Microsoft, Facebook, and more).
Trading platforms
A trading platform is the tool you’ll use to place your trade. All brokers offer some sort of platform, whether it’s their own or a third-party system like MT4.
Our award-winning platform has a simple and clean design, offering you seamless access to markets you want to trade.1 You’ll have access to interactive features, such as charts, news and analysis, IG Live, alerts and signals – all housed in one platform.
The best trading platform for beginners is almost always a demo account, where you can practise trading risk-free. The demo account will help you to build your confidence as a trader with €10,000 in virtual funds to help you hone your skills in a risk-free environment. Once you’re satisfied with your progress and you’re ready to trade using real funds, you can open a live account.
Educational material
Finding an online broker that offers plenty of training materials and learning resources can definitely help you on your trading journey. Understanding how trading works before opening any positions is crucial.
Customer service
Not only do you want to choose an online trading broker with a good platform, you also want them to help you timeously when you have questions. So, taking lines of communication and immediate availability into account is essential when choosing your broker.
If you’re a learner trader, you can make use of our client services team for a one-on-one walk through of our platform while setting up your account. We’ve also got a 24-hour live support where you can ask our trading experts for assistance. You can reach us via phone call, email or Twitter from 8am on Saturdays to 10pm on Fridays (UK time).
