Even though it is unique to the UK, spread betting on US stocks gives traders the ability to bet on stocks across the pond.
Spread betting is unique to the UK, in that it offers UK residents a tax free way to potentially profit on short-term moves in the US financial markets.
The US Stock market is one of the most volatile and liquid markets in the world. Some of the world’s largest companies (no matter where they are domiciled) opt to list their stock on the NYSE or NASDAQ. Second only to spread betting on FX, US stocks provide some excellent trading hours and market access.
Here we take a quick look at the major markets and how US stocks are traded, plus the spread betting brokers that offer US Stocks to trade online.
The two big US Stock Exchanges for spread betting
If you’ve read Flash Boys by Michael Lewis you’ll know all about how the US Stock Market works and that there are a plethora of small exchanges catering to flash trading firms and algo brokers. But the majority of liquid stocks that can be traded via spread betting are listed on the two big exchanges, the NYSE and the NASDAQ. The major difference between the two of course being that the NYSE tends to list more household names and the NASDAQ lists more high risk technology focused companies.
The major tradable US Indices for spread betting
There are four main indices that can be traded via spread betting. The DOW, S&P, NYSE and NASDAQ. The NASDAQ and NYSE composite indices are a tracker based on the overall indices. Whilst the DOW is the top 30 listed companies and the S&P is based on the price of the top 500 companies complied in the S&P Fortune 500.
Top US stocks to trade and spread bet on
The best US Stocks to spread bet on are the most liquid and one with the highest market cap. The bigger the stock (as long as they are a constituent of the DOW or S&P you should be OK) there will always be enough liquidity for spread betting firms to quote the tight spreads.
US Stocks are generally more volatile that UK stocks, purely because of how they are listed. Stock prices are generally quoted in dollars rather than pennies. This means that the spread will seem wider that with UK stocks. However, if you look at the percentage the spread is of the stock value it is actually the same. You can see this more clearly if you look at the underlying market using level 2 prices. This is a key point as the spread may seem wider quoted on screen, but in fact, that is just a reflection of the true market.
Top Spread betting brokers for US Stocks
Only a few spread betting brokers provide a very good US Stocks service, but there are three, in particular, that stand out for spread betting on US stocks.
IG offers access to around 15,000 markets including big and small US stocks. IG also offers US stock trading outside normal market hours. IG, recently launched Forex trading in the US, so have a local office in the US (Chicago too). Read our IG review here.
City Index, which was originally set up by Michael Spencer, is now owned by the Americans through Gain Capital. Therefore they have a wide range of US stocks for spread betting on their platform. Find out more about City Index here.
Spreadex, is a slightly smaller spread betting broker for spread betting on US stocks. However, it does provide excellent coverage of large and small cap US stocks. Spreadex, also positions itself as a smaller broker offering dedicated customer service to spread betting traders. Read our Spreadex review here.
ETX Capital, is one of the fasted growing and best spread betting brokers in the UK for spread betting on US stocks. They have been around a long time and offer some of the best spreads and markets. Spread betting on US stocks can be done through their basic or Pro platform. They also provide a lot of market commentary and publish economic and company events due in the week ahead. Traders can use this data to pick the best stocks with big potential moves coming up.
If you’re looking for US Stock trading ideas, Investors Intelligence have been providing research, model portfolios and actionable trading ideas since 1947. By opening a trading account you can get access to all their data, signals and analysis including the excellent Advisors Sentiment Indicator, that have been predicting market moves since 1963.
If neither of the above two brokers seem like they will be right for your trading, you can compare all the spread betting companies in the UK here.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.