The online world of spread betting
Web-based applications are fuelling a boom in spread betting, writes Simon Read
Wednesday 26 January 2011
The latest technology is opening up spread betting to more people more of the time. With iPhone apps and similar software for other devices, such as Android and BlackBerry phones, traders can now bet whenever and wherever they want; apps for the iPad and other tablets are expected to be released this year, too.
The ability to make spread betting trades on the move means people can keep more closely in touch with markets and act more quickly when they spot opportunities. It's why the key spread betting companies are at the forefront of these advances.
"The mobile developments going on in the industry at the moment are pretty exciting," says Angus Campbell, head of sales at Capital Spreads, whose firm has just launched an iPhone app. "Mobile phones are now so sophisticated that clients can access their web-based emails and all sorts of useful programmes and information."
He says there has been a major increase in demand from people wanting to access their spread betting account on their mobile. "It's understandable. If you're a regular trader, you want to be able to monitor your positions as much as possible. It simply allows you to manage your portfolio better. The more you can keep on top of your deals, the better informed you are."
Capital Spreads is just one of many firms that have launched such apps in recent times and Campbell says they've invested in the new technology to benefit clients. "The good news is that the extra technology won't impact the cost of client dealing," he explains.
Joshua Raymond, market strategist at City Index, agrees that new technology is changing the way spread betters operate and helping to shape the future of the industry. "The past year has seen a gigantic leap in the advancement of mobile technology and this will undoubtedly continue to be a key theme this year that attracts new business," he says.
His firm launched its live trading iPhone app back in October 2009 and upgraded it last year to include streaming charts with multiple technical indicators and real-time news feeds.
Since then the firm has launched the trading app on Android mobiles. The move has made a massive difference, says Raymond. "Mobile trading is, quite frankly, huge. In the space of just one year from our launch of our City Trading app on iPhone, the average amount of trades we took on mobile compared to all other platforms grew from just 2 per cent to almost 20 per cent – a huge rise in such a short space of time. We fully expect the launch on Android mobiles to increase the average past the 20 per cent mark this year with the mobiles gaining popularity so quickly."
The firm says that on average a quarter of its clients currently use its mobile trading platforms. "This emphasises the high demand for mobile trading and just how important it is for firms to stay ahead of the game in mobile technology," says Raymond.
Of course if you prefer to sit in front of your computer and trade, the existing technology is always being improved and tweaked, not least to open up opportunities to new markets.
"At the moment, the ability to do mobile trading is just an additional tool," explains Campbell. "The majority of trades are still being done over the internet." The relatively young spread betting industry saw its deals done over the phone back in the 1990s, but quickly embraced the new technology offered by the internet to improve the dealing experience for clients.
"Nowadays we seldom get clients ringing to trade," says Campbell. "It's just so easy to do it through the internet and now through mobile telephony, that there's no need to talk directly to us, especially with all the help and guidance clients can get online."
As well as exploring the uses of new technology, the spread betting companies are looking at new markets for traders. "A lot of people are starting to look towards exchange traded funds," says Campbell. "It's something that we are investigating and looking at in the same way that we would for anything that a client demands."
Many clients have already moved on from betting on the traditional stock market indices – the FTSE 100, Dow Jones and so on – to currency. Foreign exchange can be highly volatile, which gives spread betters plenty of opportunities to take positions on whether their chosen currency will rise or fall.
With the latest technology you don't even need to stick to traditional sterling against US dollar or euro trades. Most spread betting companies will offer up to 50 currency pairs whether it's pounds sterling against the Japanese yen, or the Swiss franc against the Australian dollar.
There's also a move away from trading traditional commodities, such as gold and oil. Seasoned spread betters are looking to other commodities to make a killing, including cocoa, coffee, sugar, wheat and pork bellies. In short, anything traded has a moving price and you can bet against which direction that move will be. And armed with your Android or iPhone, you can now do it anywhere, whether waiting for a train or at your desk.
Spread betting is set to become more popular and easy to use in the next 12 months and many of the major firms are now looking to expand their business overseas. Spread betting is massive in the UK and Ireland for historical reasons. It began here because of the tax status: spread betters pay no capital gains tax on their profits. But the attraction of the deals is just as strong for overseas traders.
For instance London Capital Group – the owner of Capital Spreads – expanded abroad in 2008 when it bought ProSpreads.com, the Gibraltar-based spread betting company.
"We're aiming to expand globally now," says Campbell. "We're already in Australia and are working on a multi-lingual platform, which will help service business from outside the UK."
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