Capital Spreads is part of the AIM listed London Capital Group â€“ one of the longest established and well known firms on the market. Â Does this experience and brand recognition transpire into a market leading spread betting service?Â Letâ€™s find out!
Many people consider Capital Spreads to have faltered slightly over the last few years; itâ€™s market CAP has dropped and it was overtaken rapidly by larger players City Index and IG Group. Â The white label that LCG used to operate with many third parties also seems to be having issues with some of its biggest clients dropping out.Â Although there have been problems recently, it doesnâ€™t mean that Capital Spreads doesnâ€™t still provide a great service to its clients.
In a recent survey, 83% of their clients stated that overall Capital Spreads was either â€˜goodâ€™ or â€˜very goodâ€™, and in relation to value, 89% said that they offered â€œgoodâ€ or â€œvery goodâ€ value.Â This was the highest rating of all UK brokers in relation to value (Investment Trends UK spread betting and CFD report 2009).
Capital Spreads has some of the most competitive spreads and lowest margin rates in the industry. To achieve this, they automatically create a stop loss for you dependent on the cash available from your account. This means unless the market gaps you will not lose more than your initial deposit (as the stop loss is not guaranteed) but on the downside it does mean you can be stopped out without any sort of margin call. One downside of Capital Spreads is the lack ofÂ spread betting offers.
Moreover it is competitive if you wish to hold positions over night, its financing charge uses the traditional formula for cash bets which make it particularly competitive for holding shorts. The new method of financing is simply to charge a fee irrelevant of the underlying borrowing cost, for instance with a FTSE 100 index bet with IG Index is 0.5 points no matter whether you were going long or short. Capital Spreads will offer LIBOR â€“ 2% for shorts, and +2% for longs, see website for exact formula.
This is obviously much more competitive and may be worth looking into, if you consider a FTSE 100 index bet is usually a 1 point spread, and a 0.5 point financing charge if you were going short with IG is 50% of your commission you paid the day before, whilst with LCG this is cut considerably.
Capital Spreads has recently made the decision to introduce Trade Central, a useful third party research and analysis company into its offering.Â Although this service is not unique, (IG offers a similar service) it is certainly a step in the right direction and puts it above many of its competitors. Trade Central alone would be a reason to join Capital Spreads as it provides you with the latest technical analysis. I also like the Market Squeak element which provides you with real time updates of market news. Rather than you having to scan the BBC, this gives you live updates and again is free to account holders.
Moreover, it has some nice personalized features such as analysis updates from the CEO, Simon Denham on where he thinks the markets are going, which goes a lot further to providing you with trading insights than many of the other providers. Its take on analysis therefore goes a lot further than most of the other providers, giving opinions and actual analysis from their in-house traders.
Although Capital Spreads has ups and downs recently, they are still a solid spread betting firm and it is unsuprising to see You can certainly seeÂ why Capital Spreads was voted the Best Spread Betting Provider of the year by FT/Investors Chronicle in 2009.
CAPITAL SPREADS REVIEW