Spread betting uses the same products like 60+ forex pairs, spreads and trading platforms like MT4 and cTrader as CFD trading. This Pepperstone spread betting review looks if spread betting is an option outside the UK.
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Award-winning CFD broker Pepperstone enjoys a global reputation as one of the world’s best online brokerages for forex traders. For UK account holders, however, the institution offers an additional way to play the markets: spread betting.
Below, you’ll find our review of Pepperstone’s spread betting accounts and platforms for residents of the UK.
A Pepperstone spread betting account has much in common with the broker’s CFD offering, with the exception of a slightly higher fixed spread. Like the Razor and Standard accounts, the spread betting account operates on a no-dealing desk model with straight-through processing (STP).
❗️Important: To engage in spread betting, you must reside in the UK and hold an account through Pepperstone Limited, the broker’s FCA-regulated UK entity. We previously looked at spread betting in the UK with Pepperstone.
Like Pepperstone’s Standard account developed for CFD traders, the broker’s spread betting account operates on a no-commission basis. Since the brokerage relies on a minimum spread to generate fees, a slightly wider spread applies. Pepperstone offers negative balance protection to spread betting accounts.
For currency-focused spread bettors, Pepperstone provides the opportunity to amplify your position using leverage. The allowed margins – 30:1 for major pairs and 21:1 for minor pairs – adhere to the maximum limits stipulated by UK law.
Pepperstone’s spread betting account features variable spreads starting at 0.7 pips. It’s essential for forex aficionados to be aware that Pepperstone’s average spreads for in-demand currency pairs, although competitive when compared to other brokers, can climb up to 1.3 pips.
Nonetheless, our research indicated that Pepperstone’s variable spreads either matched or surpassed those of other leading brokers regulated by tier-1 authorities. This can be ascribed to the extensive network of tier-1 liquidity providers from which the broker obtains their quotes.
You can bet on the same products Pepperstone offers for CFD trading, including forex, stocks, ETFs, indices and commodities. Blue chip stocks carry a markup of 0.8 pips in addition to the market spread while Gold has a minimum spread of 0.05.
Those who qualify for a Professional trading account can also trade cryptocurrency.
Open Standard AccountOpen Razor Account
Indeed, spread betting enthusiasts can take advantage of the highest permissible leverage levels, as regulated by the UK’s Financial Conduct Authority (FCA). These leverage ratios align with those available for CFD traders.
For retail traders, leverage restrictions are more cautious, capped at 30:1 for major currency pairs and 20:1 for minor and exotic pairs. It’s important to note that retail traders are not permitted to engage in spread betting on cryptocurrencies.
Traders with a Professional account can spread bet on forex with margins of up to 500:1, regardless of whether you bet on EUR/USD or AUD/GBP.
We experimented by opening test accounts at Pepperstone for both CFD trading and spread betting, and in both instances, we found the procedure to be commendably simple. The CFD trading account demands marginally less effort, as it doesn’t necessitate additional selections or further terms and conditions agreement.
Keep in mind that when opening a spread betting account with Pepperstone, you’ll need to present proof of UK residency and designate the Financial Conduct Authority (FCA) as your regulator during the verification process. If you fulfill these prerequisites, Pepperstone will reach out to you with an invitation to set up a profile and open an account.
Navigate to the Pepperstone website – check for ‘en-gb’ in the URL to verify that you’re in the right place and click on ‘Get Started’. Next, click the blue “Request an Account” button in the upper right corner of your screen.
If you are not a UK resident trading through Pepperstone Limited, the broker will not accept your application. Providing false information regarding your place of residence to engage in spread betting can have serious consequences, including legal action by the broker, tax penalties and prosecution.
If you’ve provided the correct documentation and selected the UK’s FCA as your regulator, you should see a “Spread Betting” option in the “Account Type” dropdown. Once you’ve indicated that you’re opening a spread betting account, you’ll need to read and agree to Pepperstone’s T&C’s.
When prompted, select the trading platform best-suited to your experience level and needs. Note that Pepperstone offers only a limited version of TradingView not suitable for spread betting.
Select “Spread Betting” from the second drop-down menu and “GBP” from the third to dominate your account in the correct currency.
Once you’ve agreed to spread betting-specific terms and conditions, selected your preferred platform and set a password, you should be all set. Click the blue ‘submit’ button in the bottom right corner of the screen to generate your new spread betting account.
Prior to opening a retail investor account with Pepperstone, it’s essential to familiarize yourself with the array of features offered and the trading expenses associated with each Pepperstone account type. Besides Spread Betting, CFD trading is another method to utilise your capital as you view with our CFD vs spread betting guide.
Pepperstone clients enjoy narrow spreads, irrespective of trading with a Standard or Razor account. Both account types employ a no-dealing desk execution model, accompanied by straight-through processing (STP), reducing the likelihood of slippage. Furthermore, both Standard and Razor account holders have the option to implement scalping and hedging tactics and automate their trading as needed.
There is no minimum deposit requirement to open a Pepperstone account, and the broker does not charge clients for depositing funds. Similar to spread betting accounts, all CFD trading account types benefit from negative balance protection.
Pepperstone’s introductory trading account offers variable spreads starting at 1.0 pips, but charges no commissions. Customers in majority-Muslim countries have the option to trade or bet via a ‘swap-free’ Islamic account.
Interested in commission-free trading? You’ll need to open a Standard account dedicated to CFDs and other derivatives.
The Pepperstone Razor account has tight spreads starting as low as 0.0 pips, but charges a £4.50 commission to MetaTrader 4 and 5 users. cTrader traders will pay USD$6.50 converted into the account base currency.
This account type is not available as ‘swap-free’, regardless of the customer’s location.
If you opt for Pepperstone as your broker, you’ll have access to a broad range of markets on which to bet or trade. In addition to forex, you can open positions on
Pepperstone offers spread bettors a choice of multiple trading platforms, each with its own set of trading tools suitable for specific trading strategies. Each of these spread trading software packages includes its own spread betting mobile app.
Tailored for forex traders, MT4 provides an extensive collection of advanced trading tools, including:
Pepperstone account holders initiating positions via MetaTrader 4 also gain access to a Figaro integration for enhanced charting, currency strength comparisons, quote boards, and market scanning technology. With a minimum of USD 500 in your account, Pepperstone offers the Smart Trader Tools suite of expert advisor add-ons to assist with managing your betting. Capitalise.ai enables automated betting for passive traders, alongside copy trading integrations such as Duplitrade and MetaTrader Signals for social trading.
If you plan to bet on other assets and instruments, you might consider alternative platforms since MT4 is geared towards forex trading.
As the successor to MT4, MT5 was developed to grant users access to centralized exchanges and the wide array of tradable assets that come with it. Users can trade in forex, equities, CFDs, and futures.
The platform’s selection of trading tools includes:
Pepperstone account holders choosing to place bets with MT5 also have access to Figaro integration and MetaTrader’s Smart Trader Tools but not Capitalise.ai. Instead, passive traders must rely on MetaTrader Signals for social or copy trading strategies.
Perfect for novice traders and those new to spread betting, the cTrader platform emulates an institutional trading environment, offering increased stability and a user-friendly interface.
Seasoned traders will appreciate the impressive assortment of technical analysis tools and customizations available, such as:
Spread betting allows traders to capitalise on financial market fluctuations without the inherent risks tied to the underlying asset (similar to forex trading). Rather than profiting from buying at a low price and selling at a high price, I can earn by accurately forecasting whether a specific tradable product’s value will ascend or descend.
For example, suppose I anticipate that Company X’s share price will surge following its imminent shareholders’ meeting. When I access my trading account, I discover my broker has set the spread at £0.10 per share. I choose to wager £15 per point on an increase in Company X’s share value. To mitigate risk, I establish a stop loss of £30.
If my prediction proves accurate and Company X’s price soars from £10 to £10.50, I’ll reap a profit of £75 (5 points x £15 per point). But what if the price plummets instead? If Company X’s shares drop to £9.50 from £10, I incur a loss of £75. Fortunately, I implemented a stop loss to manage my risk. As soon as the price dips below £9.80, my platform will instantaneously close my position (2 points x £15).
As a trader, I’ve noticed three key differences between spread betting and CFD trading:
Encompassed in market fluctuations, both spread betting and CFD trading empower my financial pursuits whilst detaching me from the perils linked to owning the fundamental asset. CFDs entail buying and selling the very contract for difference, akin to acquiring shares or currency, unlike spread betting, where my aim is to deduce the asset’s price trajectory accurately.
In addition, leverage augments my position size for both spread betting and CFD trading. The Financial Conduct Authority (FCA) delineates varying margin constraints for distinct trading activities. For example, spread betting leverage peaks at 30:1, whilst certain currency pairs observe a 20:1 ceiling.
I find that the paramount distinction between CFD trading and spread betting resides in taxation. Owing to the high-risk nature of spread betting, HMRS regards my gains as tax-exempt gambling earnings. Conversely, as a triumphant CFD trader, I must earmark sufficient funds to address capital gains and stamp duty taxes.
When you are initially ready to test spread betting there are a few steps I recommend:
It should be noted that most traders lose money with any leveraged financial product like CFDs or spread betting. Brokers do publish the percentage of brokers that lose money. My advice is to try following my process to cover all bases to give yourself a better chance of achieving success.
Yes, regardless if you spread bet or trade CFDs, Pepperstone has negative balance protection. This means you cannot lose more than you deposit into your account.
While some unlicensed brokers may accept applications from UK citizens living abroad, the majority of Tier-1 brokerages will not. Note that spread betting profits are not guaranteed tax-free outside of the UK and that spread betting in a jurisdiction that prohibits the practice constitutes a crime, regardless of citizenship. For example, a UK citizen living in the US, where spread betting is illegal, who uses a Pepperstone UK account spread bet is comitting a crime.
