CFDs over Spreadbetting

reecelyons

Newbie
1 0
Hi Guys,
might seem like a slightly menial question, but I am curious for an answer. Why is it that whenever I have seen any professional traders or traders who make a living solely from trading, the are trading CFDs. Obviously I know the pros and cons of using both CFDs and Spread betting. But what are the specific reasons as to why professional traders choose to trade CFDs over spread betting?

Thanks in advance,
Reece
 

dr.blix

Senior member
2,278 33
Well in my very limited knowledge SB companies are deemed less reliable when it comes to the accuracy of their quoted prices.
 
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highbury fx

Well-known member
338 114
Hi Guys,
might seem like a slightly menial question, but I am curious for an answer. Why is it that whenever I have seen any professional traders or traders who make a living solely from trading, the are trading CFDs. Obviously I know the pros and cons of using both CFDs and Spread betting. But what are the specific reasons as to why professional traders choose to trade CFDs over spread betting?

Thanks in advance,
Reece

most professional traders in the uk that i have been exposed to will trade a spread bet product wherever possible. they will use spread bet firms as execution brokers and have arrangements with them that is beneficial to both. the tax advantages are too overwhelming.

the traders at regulated hedge funds and sipps may be obliged by the terms their investors have signed to execute as a CFD or directly in to the underlying or exchange.
 

highbury fx

Well-known member
338 114
LOL. Please tell me you just came on here for the wind up?

not at all. I've no interest in winding anyone up. I give my honest view and to disagree is your prerogative. I answer the questions based on my experience. If you've had a different experience to me that doesn't necessarily mean I'm wrong.
 

DowJones

Experienced member
1,073 391
not at all. I've no interest in winding anyone up. I give my honest view and to disagree is your prerogative. I answer the questions based on my experience. If you've had a different experience to me that doesn't necessarily mean I'm wrong.

I had previously deleted my post, thinking "Fck me why do I bother replying to people on this forum?" However, since you have raised my post from the dead, I will continue this futile conversation a little longer...

I'm aware that you work/worked in the SB industry. My point, however is this: do you honestly think a professional trader/hedge fund are going to execute via some fckwit bucket-shop, vs executing through an institutional venue?

Allow me to reply for you: "No, Mr Jones they would not, because said hedge fund/pro traders are not fckwits".

Indeed.
 

Stargunner

Active member
127 19
In terms of retail SB and CFD firms, there's zero difference. Both can also be turned into a DMA product.

EDIT - But obviously there's the tax thing. Probably didn't need to add this though.
 

darktone

Veteren member
3,992 1,043
In terms of retail SB and CFD firms, there's zero difference. Both can also be turned into a DMA product.

EDIT - But obviously there's the tax thing. Probably didn't need to add this though.

Yes.
Unfortunately that doesnt sit well with the average tarders belief. Goto blame that red column on something other than themselves right.
 

DowJones

Experienced member
1,073 391
In terms of retail SB and CFD firms, there's zero difference. Both can also be turned into a DMA product.

EDIT - But obviously there's the tax thing. Probably didn't need to add this though.

Yes.
Unfortunately that doesnt sit well with the average tarders belief. Goto blame that red column on something other than themselves right.

Is the OP or highbury talking about retail CFDs? They mention professional traders & hedge funds - neither of whom would use such a product...
 
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lucas_king

Member
96 3
Hi Guys,
might seem like a slightly menial question, but I am curious for an answer. Why is it that whenever I have seen any professional traders or traders who make a living solely from trading, the are trading CFDs. Obviously I know the pros and cons of using both CFDs and Spread betting. But what are the specific reasons as to why professional traders choose to trade CFDs over spread betting?

Thanks in advance,
Reece

With CFDs, you have the option of trading via DMA (direct market access) which means you get better liquidity/better pricing and your orders go straight onto the exchange rather than through a broker
 

dr.blix

Senior member
2,278 33
Interesting, I was under the impression that some SB's quoted prices are questionable as they state that their figures are only BASED on an underlying market.
 

Stargunner

Active member
127 19
These days quoted prices match the underlying after carry costs, plus the market makers spread, which is often fixed these days too. I've never had a dispute with a firm, whether I've made or lost money and only ever been requoted on massive news, and only twice. One of those times actually prevented me going into a trade on the DAX which would have gone terribly, terribly wrong after the price movement.

Also spread betting can be done with DMA, google ProSpreads.
 

peakoil

Well-known member
257 38
To the OP: Just want to add that it is a nonsense to suggest that financial professionals would use CFD's only. Spreadbetting on financial instruments begun because there was (a then untapped market) for city professionals to have 'a punt on the side'.

And it is just as much a fiction to suggest, as far as nowadays is concerned, that CFD providers are somehow 'more reliable' than spreadbet providers - many of whom are in fact the same entity, simply wearing their other hat. The evidence (which this poster is a great fan of) and the relative quietness of these boards these days, almost always does not support such a proposition.

Moreover, you'll find that it's a case of each to their own circumstances, as to which way (be that by spreadbet or CFD) they should choose to take a derivative position on the underlying markets. HTH
 
 
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