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Can Spread Bets be used to trade Penny shares
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Last update : July 2010
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| This all depends on the definition of a penny share.
Some say a penny share is a company whose share price is quoted in pennies alongside a very small market capitalisation, say under £10million.
Others call a penny share any company whose share price trades under 25p regardless of market capitalisation.
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| The more traditional definition is the first one, a small capitalised company with a share price under 25p, and normally under 10p.
Spread betting firms will normally make a market in any share as long as -
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a) the market capitalisation is above £30million (alongside a reasonable amount daily trading in the shares), and
b) the client is going to trade a decent position, ie not £2 a point.
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So using these prerequisites I would think it would be unlikely that any broker would make a market on most penny shares including those traded on the PLUS market (the new name for the OFEX market).
But I could be wrong so call up your broker and ask them if they'll offer you a dealing price - they can only say no.
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| The importance of getting the right spread bet broker |
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There are good spread bet brokers and bad ones. Having a good broker won't guarantee you profits but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.
So who do I recommend? Simple, the 2 brokers I personally use for my own spread betting. Read this page for more details.
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FREE Report - How to Learn Spread Betting and Prosper
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How to build the all-important trading experience
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Simple 2 month training plan to follow
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