Recently I’ve been trialling Direct Market Access (DMA) spread betting, of the kind offered by ISE Spreads and a few other providers.
DMA spread betting has the same benefits as conventional spread betting: the ability to go long and short with equal ease, access to numerous international markets, the advantage (and risk) of leveraged trading, and tax-free* profits.
* At least in the UK, and subject to current tax laws
DMA spread betting cuts out the ‘middleman’ prices set by the spread betting companies themselves, so that you deal at real market prices corresponding with other traders’ buy and sell orders. And you can see what those orders are thanks to the Level 2 data provided.
As well as trading via conventional order tickets (just like conventional spread betting) and single-click trades, you can also trade by…
- Market Ladder: which shows those level 2 orders, and allows you to “join” the bid or ask at certain price levels.
- Depth of Market: which shows the volumes being traded at various price levels and allows you to pick off a ‘cumulative’ volume of shares or other contract lots priced below (or above) a particular level.
I have to say that these DMA facilities are not crucial for my own longer-term position trading approach that starts with smallish exploratory positions and builds up. But these facilities could make the difference for spread bettors who are trading larger quantities over shorter time periods.
I’ve not yet looked in detail at Pro Spreads (which is similar to ISE Spreads) or FP Markets (which is a little different) but I will soon. You can take a look with no obligation, for example by taking advantage of the ISE Spreads Free Trial.
Two Steps to Better Spread Betting:
1) Buy the Better Spread Betting Book
2) Sign up with Capital Spreads, IG, ETX Capital, or Spread Co
Disclaimer: this posting is for general education only; it is not trading advice.