Best Professional Trading Accounts 2022

Should you become a professional trader

First of all, professional CFD and spread betting accounts are not for everyone. I’ve been involved in spread betting and CFDs for about twenty years, but of late there has been a real move to make CFDs and spread betting mass-market products. However, they are not.

There are about 150,000 active traders in the UK, about 340,000 in EMEA and only about 100,000 in the US. Which is not really a lot, when you think about the size of the overall investing markets.

No matter how many brokers sponsor football teams, or how many flash little gits you see on Instagram bragging about their Forex profits, derivatives is not for the masses.

Trading spread betting (compare spread betting brokers here) and CFDs (compare CFD brokers here) is very risky and as per the new ESMA required risk warnings around 75% of traders lose money. But who knows what that is based on, or how accurate the reporting is, or even if it’s even relevant.

But never the less, traders will trade and they will want to make the most efficient use of their risk capital by searching for a broker that offers the best margins, rates and access.

If you qualify for a professional trading account they are a safer option than going offshore with an ASIC-regulated broker.

How to get a professional trading account:

Traders must be able to answer ‘yes’ to two or more of the below criteria to be considered for classification as a professional trader:

1. Has your trading averaged 10 significantly sized leverage transactions per quarter over the last 4 quarters?
2. Do you have a financial instrument portfolio, including cash deposits, exceeding €500,000?
3. Have you worked in the financial sector in a professional position, requiring knowledge of derivatives trading, for at least a year?

What is the difference between professional and retail status?

The key differences between brokers offering professional trading accounts are:

• Margin rates
• Commission rates
• Spread width
• Additional/restricted market access
• Voice brokerage/personal account managers

Commission reductions for professional trading accounts

Some professional trading accounts also offer rebates for higher volume trading. Or may even offer a reduction in trading commissions for high volume accounts

They may also differ in the amount of support they offer and the accessibility of their service. Because you’re classified as a professional investor, many firms may assume a certain level of knowledge on your part. This means the language may be more complicated and they may offer little in the way of tuition, or expert support.

Professional trading account margin rates

Retail margin rates are capped by the FCA and one of the major benefits of a professional trading account is that you get increased leverage and reduced margins.

The amount of leverage offered varies considerably from broker to broker so we have put together a comparison table of professional account margin rates.

There are benefits to becoming a professional trader. These benefits can include;

• a reduction in margin rates
• using collateral as margin

 You’ll be treated as someone who knows what they are doing and understands the risks they are taking on.

You’ll be given a dedicated client account manager and access to the latest and most sophisticated trading software. Most will also offer reductions on margin rates. Most importantly you’ll get better margin rates when trading CFDs or spread betting in a professional account.

However, there are disadvantages too, such as;

• no negative protection
• no leverage or product restrictions
• assumption of increased experience by the brokers so they won’t explain things in detail

As result a professional client, you’ll waive some of the FCA protections given to retail clients. Negative balance protection does not apply, so if your losses exceed your balance you could be in trouble.