What are the pros & cons of Spreadbetting versus CFDs

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Old May 31, 2009, 11:23pm   #9
 
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Or you could take your money offshore and trade with a Swiss broker
(I'm trying Dukascopy at the moment on the advice of a friend, I'll let you know)
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Old Jul 22, 2009, 2:19pm   #10
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Apart from the tax angle (this would be a nice problem to have!) I suppose it is the spread. Especially if you are trading small caps. That assumes you can put limits on inside the spread with your CFD provider.
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Old Jul 22, 2009, 7:22pm   #11
 
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Originally Posted by LION63 View Post
CMC markets provide/offer both and have stated that the only differences are the tax treatment and capital requirements. In the opinion of the director that spoke to the media, there is little or no justification for an individual based in the UK to trade via CFDs due to the tax treatment.

i've traded both with cmc and this is the official statement but not the reality.

CFds are more strictly regulated meaning that you do not suffer from some of the tricks you get with spreadbetting.

I've had a quote and chart up of the dow one on the spreadbet client the other on the cfd and there was clear differences in the current prices as well as the extreames reached.

I called and questioned and was told that both clients run off the same data feed so should be the same. blah blah blah.

it was not the case, I would recommend you go the cfd route and then move to spreadbetting if you start pulling in more then 10k a year and feel that strongly about the tax.

Another benefit of CFDs is that 1cfd is worth less then £1 a point on many instruments so you can risk less capital to begin with.
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Old Aug 4, 2009, 12:03pm   #12
 
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Thanks again for the advice.

As I only had a small initial deposit, I opted for spreadbetting over CFD's. I chose CMC as they run loads of seminars plus offered a bonus after 2 trades. Just getting used to the spread instead of having Direct Market Access, but it takes a while. Finding the charts on CMC to be fairly unreliable and not very clear, so going to trial Capital Spreads.

As far a the tax situation is concerned, I'm not at a level for it to make any difference yet. The problem with CFD's is the majority of firms want a minimum deposit of £2,500 which I wasn't prepared to do from the beginning.
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Old Aug 4, 2009, 12:13pm   #13
 
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Originally Posted by Elefteros View Post
i've traded both with cmc and this is the official statement but not the reality.

CFds are more strictly regulated meaning that you do not suffer from some of the tricks you get with spreadbetting.

I've had a quote and chart up of the dow one on the spreadbet client the other on the cfd and there was clear differences in the current prices as well as the extreames reached.

I called and questioned and was told that both clients run off the same data feed so should be the same. blah blah blah.

it was not the case, I would recommend you go the cfd route and then move to spreadbetting if you start pulling in more then 10k a year and feel that strongly about the tax.

Another benefit of CFDs is that 1cfd is worth less then £1 a point on many instruments so you can risk less capital to begin with.
Guess the discrepancy comes from the fact that the spreadbet is a derivative whereas the CFD is the true underlying. With enough size, the spreadbet could get heavily sold whilst there were buyers in the underlying, though why anyone would do this I have no idea.
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Old Sep 15, 2013, 4:07pm   #14
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I think those two sites will be useful to people interesting in spread betting / cfds
Spread Betting: http://www.financial-spread-betting.com/
CFDs: http://www.contracts-for-difference.com/

CFDs are good if you wish to trade shares since you can have direct market access. But the real advantage with CFDs is that losses incurred on CFD investments would be available for offset against other gains in the tax year. Although UK residents are particular in that they have spread betting where winnings are tax free (but then you can't offset losses) - but that's why many still prefer spread bets.
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Old Sep 16, 2013, 2:01pm   #15
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Originally Posted by luckystrike23 View Post
I think those two sites will be useful to people interesting in spread betting / cfds
Spread Betting: http://www.financial-spread-betting.com/
CFDs: http://www.contracts-for-difference.com/

CFDs are good if you wish to trade shares since you can have direct market access. But the real advantage with CFDs is that losses incurred on CFD investments would be available for offset against other gains in the tax year. Although UK residents are particular in that they have spread betting where winnings are tax free (but then you can't offset losses) - but that's why many still prefer spread bets.
Another advantage with direct market access CFDs is getting decent fills and not getting requotes or ridiculous fills

Losses made elsewhere can be offset against profits from CFDs
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