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Navigation - Spread Betting section
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| You Are Here: Home > Stockmarket & Trading > Spread Betting Section > FAQ : Question & answer |
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The difference between Spread Bets and CFDs
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Last update : March 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. |
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