Spread Bet or FX Broker

[alfiemal]

Hi all, im a short term intraday FX trader, could someone please tell me why most Forex traders like using Forex brokers rather than a Spread betting company even when trading short term. Some of the FX brokers spreads are not that much tighter, if at all, than what is offered by the likes of IG index. Some FX brokers offer 4 pips spread on some pairs and IG offer exactly the same.

Even if the spreads are wider with a SB company, I noticed Dukascopy Swiss FX does offers tighter spreads, if you trade full time with a broker and make good profits the commisions and eventually the tax bill takes away much of the advantage of tighter spreads. Also Capital Gains Tax on any profits may be 18%, but if this was classed as a full time occupation and main source of income, I wouldnt be suprised if the Inland Revenue may well make you pay the full 40% tax on a portion of it, if you had made a big profit, in which case its even more difficult to justify using a broker over SB company.

I know im probably missing something but i dont know what!

 

[£10kLoser]

I spread bet with IG without any problems but the main reason people prefer a broker has to do with the fact that the spread bet company benefits if you lose, so many people claim that they've been unfairly treated and lost money. A broker should hedge all trades so that they (in the long run) break even on the trades and only make money on the spread as they don't hold the positions themselves.Consequently, there exists a whole load of stories about dirty tricks.

Although SB companies also hedge but your profit and loss comes out of their funds.

Most also have larger spreads on most products other than the ultra-competive Forex market.

Bottom line I would say is that unless you're disatisfied, stay with SB. I had problems with CMC and closed my account after several years but I'm happy with IG (and Capital Spreads although I only trade small time with them).

 

[alfiemal]

Hi, I agree with your comments and will continue to use IG Index until I can see a clear advantage of using a FX broker. Ive heard all the stories about SB companies but I dont have any problems with IG. Maybe as you say when they have larger spreads on the other products is where the problems may start. Thanks.