Spread betting v CFDs

[countrydj]

I am very new to trading and I can't understand what the difference is between Spread betting and trading CFDs.
Or am I being thick ???
Can somebody explain the difference in 'Noddy' terms.

Thanks

 

[Alpari UK]

I am very new to trading and I can't understand what the difference is between Spread betting and trading CFDs.
Or am I being thick ???
Can somebody explain the difference in 'Noddy' terms.

Thanks

Hi countrydj,

Welcome to the forum!

I thought I'd jump in here, as no one has replied to you so far.

What is spreadbetting?
Financial spread betting is a type of derivative product that allows you to bet on the price movements of the financial markets where the risk per pip can be defined to a specific value.

For example,

Let’s say you placed a sell order in GBPUSD at an opening price of 1.56850, which you closed at 1.55223 for a stake of 12p/pip:

Profit or loss = (opening price - closing price) x 10,000 x stake
Profit or loss = (1.56850 - 1.55223) x 10,000 = 162.7
Stake 12p/pip x 162.7 pips = GBP19.52 profit

On the other hand, if you placed a buy order in GBPUSD at an opening price of 1.56850, which you closed at 1.55223 for a stake of 12p/pip, the outcome would be different:

Profit or loss = (closing price - opening price) x 10,000 x stake
Profit or loss = (1.55223 - 1.56850) x 10,000 = -162.7
Stake 12p/pip x 162.7 pips = GBP19.52 loss

The main advantage is that if you’re a resident of the UK or the Republic of Ireland, you can trade forex, indices and commodities tax free.

What are CFDs?
Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as indices and commodities).

You can spread bet on currency pairs, indices and commodities.


Alex

________
Alexander Chadwick
Alpari (UK) Representative

 

[countrydj]

Hi Alex...
Many thanks for your reply and explanation.
I was beginning to think that nobody was going to answer.
I will have to study it a lot more in order to understand it fully.
I do appreciate your help...
THANKS

John C

 

[Alpari UK]

Hi Alex...
Many thanks for your reply and explanation.
I was beginning to think that nobody was going to answer.
I will have to study it a lot more in order to understand it fully.
I do appreciate your help...
THANKS

John C

Always happy to help John

We offer a wide range of material to help you develop as a trader. For a full overview of our education, please click here.

Have a great weekend!


Alex

________
Alexander Chadwick
Alpari (UK) Representative

 

[timsk]

Hi Alex...
Many thanks for your reply and explanation.
I was beginning to think that nobody was going to answer.

Hi John,
Apologies, I try and respond to posts such as yours - but sometimes they slip through the net. Take a look at our FAQ section, to which you should have been given a link in the welcome e-mail when you joined. The FAQ that's of specific interest to you is this one: What are the Pros and Cons of Spread Betting Vs CFDs?

Hope that helps,
Tim.

 

[jkane]

use cfd's

plus lower bet sizes if you like vs spread betting

most spread betting companies spreads too high

 

[countrydj]

Many thanks to all who helped with my question.
After careful study, I have decided that cfd is the best way for me.
Thank you...