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Spread betting and CFD (Contract for Difference) trading are two prominent methods for trading shares, forex, commodities, and other financial instruments. These approaches are widely recognized for their prevalence in the trading community. Although there are significant similarities between spread betting and CFD trading, it is crucial for traders to understand the key distinctions that set them apart.
This guide is designed to provide a comprehensive overview of both spread betting and CFD trading. It will delve into the mechanics of each method, offering detailed insights into their operational frameworks. Our objective is to equip traders with the necessary knowledge to discern which trading approach, spread betting or CFD trading, aligns optimally with their individual trading strategies and financial goals.
75.26% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.
Spread betting is a sophisticated financial strategy classified under derivative trading, where participants engage in speculation on the price movements of an underlying asset, such as a stock, commodity, or currency pair, without actually owning the asset. In this approach, traders make predictions on whether the price of the asset will increase or decrease. They place bets based on these predictions, using the buy and sell prices provided by a broker.
The core mechanism of spread betting involves the ‘spread’, which is the difference between the buying price and the selling price set by the broker. Traders bet an amount per point movement in the asset’s price. Profits or losses are then realized based on the accuracy of their speculation in relation to the asset’s price movement, multiplied by the stake per point. This method allows traders to leverage their positions, potentially amplifying gains; however, it also increases the risk of substantial losses. Spread betting is particularly noted for its tax efficiency in some jurisdictions, as profits may not be subject to capital gains tax. However, it’s important for traders to be aware of the high risk and complexity involved in spread betting, making it more suitable for experienced investors.
Key insights
Spread betting enables market direction speculation without the need for possessing the underlying asset.
Promoted as a tax-efficient and commission-free strategy, spread betting allows participation in diverse market conditions. However, it is important to note that it is prohibited in the U.S.
Similar to stock trading, spread betting risks can be managed through stop loss and take profit orders.
Mechanics of financial spread betting
In spread betting, analogous to stock market operations, two prices are quoted: the bid price for buying and the ask price for selling. The ‘spread’ is the differential between these prices. Spread-betting brokers derive their profits from this spread, which eliminates the need for commission charges that are typically incurred in standard securities trading.
Investors opt for the bid price if they anticipate a market rise, and choose the ask price if they predict a decline. Spread betting is characterized by the application of leverage, the capacity for both long and short positions, access to a diverse range of markets, and potential tax advantages.
Comparing Stock Market Trades and Spread Bets
Illustrative Example: Stock Market Transaction vs. Spread Betting
To elucidate the distinctions and mechanics of derivative markets, let us examine a practical example, comparing a conventional stock market trade with a corresponding spread bet.
Case Study: Stock Market Transaction Imagine an investment scenario where 1,000 shares of XYZ Corporation are purchased at £193.00 each. Subsequently, the stock value increases to £195.00, and the position is liquidated, yielding a gross profit of £2,000 (£2 per share on 1,000 shares). Key considerations in this scenario include the substantial initial capital requirement of £193,000 without leveraging. Additionally, transaction fees for both entry and exit would typically apply, and the profit might be subjected to capital gains tax and stamp duty.
Case Study: Spread Betting Equivalent Now, let’s examine a parallel situation using spread betting on the same XYZ Corporation. For this spread bet, the entry is at the same price of £193.00. The primary decision in spread betting is determining the stake per ‘point’, which represents the unit of price movement. Assume in this instance, one point corresponds to a one pence change in the XYZ stock price.
Opting for a bullish stance, a ‘buy’ or ‘up bet’ is placed on XYZ at £10 per point. Mirroring the stock market scenario, the XYZ share price climbs from £193.00 to £195.00. Here, the bet captures a movement of 200 points (the £2 increase), resulting in a profit of 200 points times £10 per point, equating to £2,000, similar to the stock market trade but achieved with potentially lower capital outlay and different tax implications.
Comparative Analysis: Stock Market Trade vs. Spread Bet
Aspect
Pros of Spread Betting
Cons of Spread Betting
Financial Implications
– No commissions on opening/closing positions.
– Profits not subject to capital gains tax or stamp duty in regions like the U.K. and some European countries.
N/A
Cost Considerations
– Avoids traditional commissions.
– Traders face the bid-offer spread, which can be wider than in other markets.
– Profitability requires overcoming this spread.
Capital Requirements
– Lower capital requirement due to leverage.
– Example: Only £9,650 needed as a deposit for the same market exposure that would require £193,000 in stock trading.
N/A
Leverage and Risk
– Leverage can significantly increase profits if the market moves favorably.
– Leverage also increases the potential for significant losses.
– High-risk due to potential rapid gains or losses on a small deposit.
Market Movements and Responses
N/A
– In negative market conditions, there might be a need to increase the deposit or face automatic closure of positions.
– Less flexibility compared to stock trading in enduring market downturns.
What Is a Contract for Differences (CFD)?
A Contract for Differences (CFD) represents a sophisticated financial instrument utilized in derivatives trading. It involves a contractual agreement where the variance between the opening and closing prices of a trade is settled in cash, rather than through the physical delivery of goods or securities. This characteristic underscores the distinct nature of CFDs as purely financial transactions.
CFDs are acknowledged as a complex and advanced trading strategy, predominantly employed by seasoned traders who possess a deep understanding of the financial markets. It is important to note that the use of Contracts for Differences is prohibited within the United States, reflecting the specific regulatory environment and the inherent risks associated with this type of trading.
Comprehensive Guide to Contract for Differences (CFD) Trading
Contract for Differences (CFDs) provide traders with the opportunity to speculate on price movements of securities and derivatives. Derivatives, in this context, are financial instruments whose value is contingent upon an underlying asset. Essentially, CFDs are leveraged by investors to place bets on the direction of price changes – whether they anticipate the price of the underlying asset or security will increase or decrease.
Trading Dynamics in CFDs
CFD traders have the flexibility to wager on both upward and downward price movements. Those predicting an increase in price will typically buy the CFD. Conversely, traders who anticipate a decrease in price will initiate a trade by selling.
When a trader who has bought a CFD observes an increase in the asset’s price, they may opt to sell their holding. The financial outcome is determined by the difference between the buying and selling prices. This net difference, reflecting either a profit or a loss, is then reconciled through the investor’s brokerage account.
On the other hand, traders who envisage a fall in a security’s price may start with a selling position. To finalize the trade, they will purchase a corresponding trade to offset the initial one. Similar to the buying scenario, any gains or losses incurred are settled in cash through their brokerage account, marking the conclusion of the trading activity.
Deciphering Contract for Differences (CFD) Trading
Contract for Differences (CFDs) presents traders with the opportunity to speculate on the price movements of various securities and derivatives. Derivatives, in this context, are financial instruments whose value is dependent on an underlying asset. Primarily, CFDs are employed by investors to speculate on the future direction of an asset’s price – predicting whether it will increase or decrease.
Trading Dynamics in CFDs
CFD traders engage in market speculation by predicting the direction of price movements. Those anticipating an increase in the asset’s price will typically enter a position by buying the CFD. Alternatively, traders who foresee a decrease in price will initiate their strategy by selling.
When a trader who has acquired a CFD observes a rise in the asset’s price, they can choose to sell their position. The financial outcome of this transaction is determined by the difference between the purchase and selling prices. This net difference, which represents either a profit or a loss, is then reconciled through the investor’s brokerage account.
In scenarios where a trader predicts a decline in the price of a security, they can initiate a position by selling. To close this position, they are required to execute an offsetting purchase. Similar to the process for buying, any resulting profit or loss is cash-settled via the trader’s account, thus completing the trading cycle.
Illustrative Case: Trading a CFD on the SPDR S&P 500 ETF
Consider a scenario where an investor decides to engage in a Contract for Differences (CFD) trade on the SPDR S&P 500 (SPY), an Exchange-Traded Fund (ETF) that mirrors the performance of the S&P 500 Index. The broker stipulates a 5% margin requirement for initiating the trade.
The investor opts to purchase a CFD equivalent to 100 shares of the SPY, priced at $250 per share. This establishes a market position valued at $25,000. However, under the CFD arrangement, the investor only needs to provide 5% of this value upfront, amounting to $1,250, as a deposit to the broker.
Fast forward two months, the SPY’s market price rises to $300 per share. The investor decides to close the position, resulting in a profit of $50 per share, or a total gain of $5,000.
In settling the CFD, the process involves cash settlement. The initial market exposure of $25,000 (100 shares at $250 each) and the closing value of $30,000 (100 shares at $300 each) are reconciled. The net gain of $5,000 is then credited to the investor’s account, reflecting the successful outcome of this CFD trade.
CFD pros and cons
Aspect
Pros of CFD Trading
Cons of CFD Trading
Trading Flexibility
– Enables trading on the price movement of various assets including ETFs, stock indices, and commodity futures.
– Offers the option to take long or short positions, facilitating diverse trading strategies.
– Exposure to extreme price volatility can lead to significant spreads between bid and ask prices.
Asset Ownership
– Provides the benefits and risks akin to owning a security, without the necessity of actual ownership.
– Absence of actual asset ownership may not suit all investment strategies.
Leverage
– Leverage allows for trading with a smaller initial investment, as only a fraction of the trade’s total value needs to be deposited with the broker.
– While leverage can increase potential gains, it also significantly amplifies potential losses.
Regulatory Environment
N/A
– The CFD industry has less stringent regulation, is prohibited in the U.S., and depends heavily on a broker’s credibility and reputation.
Margin Requirements
N/A
– In the event of a losing position, traders may face margin calls, necessitating the deposit of additional funds to maintain their positions.
Spread Betting vs. CFD Trading Main Differences
Spread Betting and CFD (Contract for Difference) Trading, while seemingly similar in their approach to market speculation, have distinct differences that cater to different types of investors and financial objectives.
Spread Betting is primarily a tax-efficient method of trading in the UK and Ireland, offering traders the ability to speculate on the price movements of various financial instruments without actually owning the underlying asset. One of its most significant advantages is its tax-free status, as profits from spread betting are not subject to capital gains tax in these regions. Furthermore, spread betting allows traders to bet a certain amount per point movement, making it easy to understand and manage risk. However, it’s primarily used for shorter-term trading and speculation.
In contrast, CFD Trading provides a more globally accessible vehicle for speculation and hedging, offering the ability to trade on margin and leverage positions. Unlike Spread Betting, CFDs allow for direct speculation on the rise and fall of market prices and involve the exchange of the difference in the asset’s price from when the contract is opened to when it is closed. CFDs are subject to capital gains tax but provide access to a wider range of markets worldwide. Moreover, they are often used for both short-term speculations and longer-term investment strategies.
Both methods use leverage, which can magnify both gains and losses. However, the key distinctions lie in their tax implications, market accessibility, and the financial objectives they are best suited for. Spread Betting is generally favored by individuals looking for a tax-efficient, short-term trading strategy in specific geographic locations, while CFDs are chosen for their versatility in trading strategies and broader market access.
Spread betting vs. CFD trading main differences:
Here is a quick look at some of the key differences between spread betting and CFD trading:
Aspect
Spread Betting Key Takeaways
CFD Trading Key Takeaways
Tax Efficiency
Profits are not subject to capital gains tax in the UK and Ireland.
Profits are subject to capital gains tax.
Trading Mechanism
Involves betting a specific amount per point movement.
Involves trading on the difference in the asset’s price from open to close of the contract.
Geographic Focus
Primarily utilized in the UK and Ireland.
Offers broader international market access.
Trading Term
More suited for short-term market movements and speculation.
Versatile; suitable for both short-term speculations and longer-term investment strategies.
Asset Ownership
Traders speculate on price movements without owning the underlying asset.
Involves direct speculation on the rise and fall of market prices.
Leverage and Margin
Utilizes leverage in trading, which can magnify gains and losses.
Allows for margin trading and leveraging positions, amplifying both potential gains and losses.
Spread Betting vs. CFD – Tax
The taxation of profits from spread betting and CFD (Contract for Difference) trading represents a significant distinction between these two forms of derivatives trading. It’s essential to understand these differences, especially in the context of regulatory and tax frameworks in different countries.
In the United Kingdom and Ireland, spread betting is treated distinctly from CFD trading regarding taxation. Spread betting, while regulated by the Financial Conduct Authority (FCA) in the UK, is categorized differently in the United States. The US considers spread betting akin to internet gambling, which is prohibited under its laws. It’s also important to note that all forms of income, including gambling winnings, are subject to taxation in the USA.
Looking specifically at the UK and Ireland, traders engaging in spread betting or CFD trading do not pay stamp duty, as they do not own the underlying asset in these transactions. However, the tax implications for profits vary significantly between these two. Profits from CFD trading are subject to Capital Gains Tax (CGT). This means if you realize a profit from CFD trading, you are obligated to pay CGT on those gains. However, there is a provision in the tax code that allows traders to use losses incurred from CFD trading to offset gains from other CFD trades or other financial instruments.
On the contrary, spread betting in the UK and Ireland offers a tax advantage as its profits are not subject to CGT. This makes it a popular choice for traders looking to optimize their after-tax returns. However, it’s important to note that while spread betting can yield tax-free profits, any losses incurred from spread betting cannot be used to offset gains from other forms of investments, including CFD trading.
This difference in tax treatment is a crucial consideration for traders when choosing between spread betting and CFD trading, as it can significantly impact the net profitability of their trading activities.
Spread Betting vs CFD – Fees
One key distinction between CFDs (Contracts for Difference) and spread betting pertains to the fee structure associated with trading these financial instruments. In spread betting, traders typically do not incur commissions. However, when trading CFDs, transaction fees or commissions were traditionally a standard part of the trading cost. The landscape is evolving, though, with many CFD providers now offering commission-free trading options to their clients, making CFD trading more accessible and cost-effective.
Both CFD trading and spread betting involve dealing with spreads. The spread is the difference between the bid (sell) price and the ask (buy) price of the underlying asset. This cost varies depending on the asset’s liquidity and type. More liquid markets usually offer narrower spreads, making them more attractive to traders due to lower trading costs.
For those trading forex pairs using CFDs, it’s crucial to be aware of the currency implications. CFDs must be purchased in the currency corresponding to the forex pair being traded. This means if you’re trading forex pairs that are not in your account’s base currency (commonly GBP or USD), you might incur a currency conversion fee charged by your broker. This additional cost can affect the overall profitability of your trades, especially if you engage in frequent currency exchanges.
In contrast, spread betting offers a bit more flexibility in this regard. You can open spread bets on forex pairs in various currencies without the need to worry about currency exchange fees. This feature of spread betting can be particularly advantageous for traders who wish to engage in forex markets without the hassle and additional cost of dealing with currency conversions.
Understanding these differences in fee structures and currency implications is vital for traders when choosing between CFD trading and spread betting. Each method has its own set of advantages and considerations, and the choice depends on individual trading strategies, financial goals, and the specific market conditions a trader is navigating.
Spread Betting vs CFD – Expiry Dates
Furthermore, CFDs differ from spread bets in terms of their expiration dates.
There is no expiration date associated with CFD contracts. As a general rule, contracts are set up for one month at a time, but your broker will automatically convert your position into a new one before the old one expires. So if your position is losing money, you can keep it open for as long as you want (even if you have to pay holding fees and even if you have to pay higher margin requirements).
Conversely, spread bets have a defined expiration date, whereas futures bets do not. In general, there are two types of spread bets: those that expire at the end of the trading day and those that expire every quarter. If your broker allows you to roll over a spread bet into a new contract, you may be able to do so, depending on the broker. In any case, it is important to remember that if you do not roll your contract over when your contract expires, your bet will automatically expire as well.
Spread Betting vs CFD – Regulation
The regulatory landscape for spread betting and CFD trading is primarily governed by the Financial Conduct Authority (FCA) in the UK. The FCA is the foremost regulatory body in the UK, responsible for establishing and enforcing rules that regulate how brokers can offer leveraged financial products to retail investors. Its role as the UK’s principal financial watchdog is critical in ensuring fair practices and protecting investor interests in the financial markets.
For traders based outside of the United Kingdom, particularly in the United States, it’s important to understand the geographical limitations and legal implications of these trading instruments. Spread betting is specifically allowed and regulated in the United Kingdom and Ireland. It offers tax-efficient trading opportunities, making it an attractive option for traders in these regions. However, spread betting is currently illegal in the United States. This prohibition means US residents are generally unable to open spread betting accounts with UK-based companies. Instead, they have the option to engage in CFD trading, which is available worldwide and not restricted in the same manner as spread betting.
While all brokers offering spread betting in the UK are regulated by the FCA, CFD trading platforms may fall under the jurisdiction of various regulatory bodies depending on their location. For instance, some brokers offering CFD trading might be regulated by foreign authorities like the Cyprus Securities and Exchange Commission (CySEC), adding an additional layer of complexity for traders to consider when choosing a broker.
A crucial point for investors to note is the FCA’s stance on cryptocurrencies in relation to CFDs and spread betting. As of the latest regulatory updates, the FCA has banned the trading of cryptocurrency derivatives, including CFDs and spread betting options, related to cryptocurrencies.
This ban reflects the regulatory body’s concerns over the extreme volatility and potential risks associated with cryptocurrency markets. As a result, traders looking to engage in cryptocurrency investments will need to explore alternative avenues outside of CFDs and spread betting platforms. This regulation is a critical consideration for investors interested in combining leveraged trading with the cryptocurrency market.
Best spread betting platform
Pepperstone – Spread Bet with MT4, MT5, and cTrader
Pepperstone is highly regarded as one of the best online brokerages for forex traders globally, and it offers an additional avenue for market participation through spread betting, specifically for UK account holders. This distinction makes Pepperstone particularly appealing for its versatility in accommodating various trading preferences.
Here’s an in-depth look at why Pepperstone is often considered the best platform for spread betting:
1. Tight Spreads
One of the most critical aspects of spread betting is the spread – the difference between the buy and sell price. Pepperstone is known for offering some of the tightest spreads in the industry, particularly in forex, commodities, and indices. This is crucial for spread betting as tighter spreads mean lower costs for traders, enhancing potential profitability.
2. Range of Markets
Pepperstone provides access to a wide range of markets, including forex, indices, commodities, and cryptocurrencies. This diversity allows spread bettors to speculate on various markets and asset classes, providing ample opportunities for diversification and risk management.
3. Advanced Trading Platforms
Pepperstone offers sophisticated trading platforms like MetaTrader 4, MetaTrader 5, and cTrader. These platforms are equipped with advanced charting tools, automated trading features, and comprehensive analysis tools, catering to both novice and experienced traders.
4. Execution Speed
Pepperstone is known for its exceptional execution speed, which is vital in spread betting where milliseconds can impact the outcome of a trade. Fast execution ensures that traders can enter and exit positions at their preferred prices, even in volatile market conditions.
5. Regulation and Security
Pepperstone is regulated by several reputable financial authorities, including the Australian Securities and Investments Commission (ASIC) and the Financial Conduct Authority (FCA) in the UK. This regulatory oversight provides traders with a secure and fair trading environment.
6. No Dealing Desk (NDD) Execution
Pepperstone operates on a No Dealing Desk (NDD) execution model, meaning that there is no conflict of interest between the broker and the trader. This model ensures that traders get the best possible prices without any interference.
7. Leverage Options
Spread betting with Pepperstone offers the advantage of leverage, allowing traders to gain a large exposure to financial markets with a relatively small capital outlay. This can amplify profits but also increases risks, so it should be used judiciously.
8. Educational Resources and Support
Pepperstone provides extensive educational resources and support, including webinars, trading guides, and market analysis. These resources are invaluable for both beginners and experienced traders looking to refine their spread betting strategies.
9. Customer Service
The platform is known for its excellent customer service. Traders have access to a knowledgeable and responsive support team, which is crucial for resolving issues quickly and efficiently.
10. Risk Management Tools
Pepperstone offers a range of risk management tools, including stop-loss orders and negative balance protection. These tools are essential for managing risk, particularly in the volatile world of spread betting.
Fee
Amount
Stock trading fee
$0.02 in US share CFDs
Forex trading fee
$3.50 per lot per trade plus the spread cost, with an average spread cost of 0.2 pips
76.25% of retail investor accounts lose money when trading CFDs with this provider.
Best CFD trading platform
eToro - Best CFD Trading Platform with Shares, Forex, & More
eToro's combination of a wide range of trading instruments, user-friendly interface, innovative social trading features, strong regulatory framework, competitive pricing, and robust community engagement positions it as a leading choice for CFD trading in shares, forex, and more. These features make it particularly appealing to a wide range of traders, from beginners to experienced professionals.
Below are the key reasons why eToro is often considered the best CFD trading platform:
1. Wide Range of Trading Instruments
eToro offers a broad spectrum of trading instruments, including shares, forex, cryptocurrencies, ETFs, indices, and commodities. This diversity allows traders to access various markets worldwide, making it easier to diversify their portfolios and explore different investment strategies.
2. User-Friendly Interface
One of eToro's most significant advantages is its intuitive and user-friendly interface. This makes it highly accessible, even for beginners. The platform provides an easy-to-navigate environment, making it simpler for users to find and trade various financial instruments.
3. Social Trading Features
eToro is renowned for its social trading features, particularly the 'CopyTrading' function. This feature allows users to replicate the trades of successful investors automatically. It's an excellent tool for beginners who want to learn from more experienced traders or for those who wish to benefit from the expertise of seasoned investors.
4. Educational Resources
eToro offers an extensive range of educational resources, including webinars, trading courses, and guides. These resources are invaluable for both new and experienced traders, offering insights into trading strategies, market analysis, and financial management.
5. Regulation and Security
eToro is regulated by several financial authorities, including the Cyprus Securities and Exchange Commission (CySEC), the Financial Conduct Authority (FCA) in the UK, and others. This regulatory oversight ensures a high level of security and fairness for its users.
6. Demo Account Facility
eToro provides a demo account with virtual funds, allowing new traders to practice trading without risking real money. This feature is particularly beneficial for beginners who are still learning the ropes of CFD trading.
7. Competitive Spreads and Fees
eToro offers competitive spreads and fees, especially in the forex and stock CFD markets. This is crucial for traders who frequently execute trades, as lower costs can significantly impact profitability.
8. Innovative Technology
eToro continually invests in its technology to provide traders with advanced tools and features. This includes real-time data, analytical tools, and automated trading options, enhancing the overall trading experience.
9. Community Engagement
eToro's platform fosters a sense of community among its users. Traders can interact, share insights, and discuss market trends. This community aspect can provide additional perspectives and insights, valuable in decision-making.
10. Global Accessibility
eToro is available in many countries, making it a globally accessible platform. This wide reach means traders can connect with and learn from a diverse group of individuals worldwide.
Fee
Amount
Stock trading fee
Free
Forex trading fee
Spread, 2.0 pips for GBP/USD
Crypto trading fee
Spread, 0.75% for Bitcoin
Inactivity fee
$10 a month after one year
Withdrawal fee
$5
Note: Only cryptocurrencies eToro customers in the United States will be able to trade on the platform will be Bitcoin, Bitcoin Cash, and Ethereum.
67% of retail investor accounts lose money when trading CFDs with this provider.
Conclusion
Spread betting and CFD (Contract for Difference) trading represent two prominent strategies in the realm of financial derivatives. These methods provide investors the opportunity to speculate on the future price movements of an asset without the necessity of holding the actual asset. This approach offers a flexible and dynamic avenue for engaging in the financial markets.
When deliberating between spread betting and CFD trading, it’s crucial to comprehend their distinct characteristics and the implications of these differences. Spread betting is primarily recognized for its tax efficiency in certain jurisdictions, as it typically falls outside the scope of capital gains tax. This feature can be a significant advantage for traders looking to optimize their tax position. Conversely, CFD trading, while subject to capital gains tax, offers expanded global accessibility and the benefit of not having contracts that expire. This allows for a more continuous trading experience.
For individuals inclined towards spread betting, Pepperstone emerges as a highly recommended platform. Known for its user-friendly interface, competitive spreads, and a diverse range of markets, Pepperstone provides an optimal environment for engaging in spread betting activities.
In contrast, those interested in venturing into the world of CFD trading may find eToro to be an exemplary choice. eToro stands out with its innovative social trading features, comprehensive range of CFD instruments, and robust regulatory framework, making it an ideal platform for both novice and experienced CFD traders.
In summary, both Pepperstone and eToro offer tailored solutions that cater to the specific needs of spread bettors and CFD traders, respectively. As with any investment, it’s advisable to conduct thorough research and consider individual financial goals and risk tolerance before committing to either trading strategy.
67% of retail investor accounts lose money when trading CFDs with this provider.
FAQs
Is spread betting the same as CFD trading?
CFD trading and spread betting both use leveraged derivatives to let you speculate on the price of an underlying asset without actually owning it. Nevertheless, they are different forms of trading, and they have different tax implications and fees associated with them.
Can I trade CFDs commission-free?
eToro, for example, offers 100% commission-free CFDs. In addition, spread betting is always commission-free at brokers that offer it.
Is it possible to choose the amount of leverage for CFDs and spread betting?
Depending on the asset you choose, you may be able to choose how much leverage to use. In addition, your broker may be able to let you adjust the leverage you use.
Direct market access: what is it?
Direct market access means that your trade is passed directly to the market for execution without being reviewed by the broker's in-house trading office first. Consequently, your trade is executed faster and more transparently. However, direct market access is only available for CFD trading, not spread betting.
Is spread betting legal in the US?
Spread betting is currently not legal in the United States. In addition, US citizens generally cannot open spread betting accounts with most spread betting companies in the UK. Still, they may open contracts for difference (or CFD) accounts.
Before starting his career as a freelance writer, Jhonattan studied at the Universidad La Gran Columbia from which he graduated in 2019. Jhonattan describes himself as a crypto enthusiast and regularly writes price prediction articles for new projects. During his time as a writer, Jhonattan has gained great knowledge about the crypto space and has mastered technical analysis skills that he uses when writing token price predictions. As well as writing for Trading Platforms, Jhonattan has written for Stocksapps.com and Buyshares.co.uk.
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