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The difference between Spread Bets and CFDs
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Last update : July 2010
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| They're both leveraged products but where spread bet profits are tax-free, they're taxable with CFDs.
Other differences include -
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- The bid-offer spread on a CFD is usually the same as if trading the underlying share, this is not the case with spread bets where the quote is derived from the underlying market and might be very different
- Losses on CFDs are offsettable against tax
- Margin is different between the two products, although it works out at a similar cost
- CFDs are normally always traded on stocks whereas spread bets are traded on many different markets
- Commissions are levied on CFDs
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| So which product is better to use? It's a hard question to answer but most professional traders, ie those who trade for a living and who operate in the stockmarket, tend to prefer to trade CFDs. |
| The importance of getting the right spread bet broker |
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There are good spread bet brokers and bad ones. Having a good broker won't guarantee you profits but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.
So who do I recommend? Simple, the 2 brokers I personally use for my own spread betting. Read this page for more details.
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FREE Report - How to Learn Spread Betting and Prosper
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How to build the all-important trading experience
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Where to get trading help and advice
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Which broker to use and why
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Simple 2 month training plan to follow
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Download the FREE report |
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Read more in the Spread Betting section:
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