CFD's or Spread Bet?

Tai-pan

Junior member
10 0
I live in the UK and have been trading for several years, I spread bet with Core Spreads, their spreads are tight and I have no problem with them. I'm hoping you can advise me as to why all UK traders don't spread bet, why pay tax if you do not have to? Am I missing something? The start of next year I will be funding my account with £100,000 is this too much to spread bet with, do I need to trade CFD's, if so why? I would be most grateful if any professional trader can help me out as I'm a little confused. Many thanks.
 

tomorton

Legendary member
7,286 973
Most people don't understand taxation.

If you fund your account with as much as £100,000, you will have exceeded the regulatory protected deposit amount. Although there is only a small risk of a UK-regulated firm going bust, only the first £85,000 of your deposited funds will be covered by the FCA account protection scheme if it does happen.
 

Tai-pan

Junior member
10 0
Is this the same for CFD's as well as Spread betting? I would have thought most professional traders would have a lot more than £85K in their accounts. Thanks for the warning.
 

tomorton

Legendary member
7,286 973
SB is counted by ESMA and the FCA as a type of CFD, so the regulatory requirements in the UK are parallel. It is the tax treatment which differs.

Yes, professional traders are usually required to deposit and trade much larger accounts plus to have additional investment resources than a private retail trader, and they are not given the same regulatory protection as non-professionals. From what I have read it seems only the first £85k of their deposit is protected under the FSCS.
 
Last edited:

kalott

Established member
678 57
I live in the UK and have been trading for several years, I spread bet with Core Spreads, their spreads are tight and I have no problem with them. I'm hoping you can advise me as to why all UK traders don't spread bet, why pay tax if you do not have to? Am I missing something? The start of next year I will be funding my account with £100,000 is this too much to spread bet with, do I need to trade CFD's, if so why? I would be most grateful if any professional trader can help me out as I'm a little confused. Many thanks.
Could be this thing?

"Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider "


Core spreads traders have more luck or skills? and only 59,9% of retailers lose money
 

Tai-pan

Junior member
10 0
Could be this thing?

"Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider "


Core spreads traders have more luck or skills? and only 59,9% of retailers lose money
The spreads are really tight with Core Spreads and they're fixed, a lot of brokers will show their spreads but the spread they show is not indicative of high trading times, they tend to show prices during the quiet times. When the spreads are not fixed they can vary a lot! I've looked at a few other brokers with DMA and by the time you factor in the commission you are not always better off, so the cost of placing the trade is more a less the same. Obviously, the most attractive difference between S/B and CFD's is you do not have to pay Tax. So, let's say you profit £100k from trading using the S/B instrument, you get to keep the full wack. However, if you made the same £100k using CFD's you will have to give up £10 - £20K of it, leaving you with about £80k. To me, it seems like a no brainer, if you live in the UK you would be better off Spread Betting. But, not everyone does, I'm still looking to hear from any professional traders as to why one would choose CFD's over S/B, or maybe they don't.
 

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