What's the difference between CFD trading and Spread Betting?

James Nicole

Newbie
Aug 31, 2018
2
0
2
33
I've read a few articles online that try and explain this, but they both just sound like the same thing with different names? I have been advised that CFD trading is better and to be fair, my broker Jones Mutual only offers CFD trading, but should I be looking at spread bets as well?
 

Enivid

Administrator
Staff member
Nov 30, 2008
18,532
1,355
144
Odesa
www.earnforex.com
I would appreciate it if you explain further. So only residents of both places can participate in spread betting?

No, some brokers allow spread betting for everyone, but spread betting is useful only if you live in the United Kingdom or Ireland because spread betting profits are tax-free there.
 

J_C_Anderson

Trader
Aug 15, 2018
64
9
19
44
Some brokers have no direct access to the markets, so the alternative they provide is CFD trading. For expamle, the price on CFD on stocks is the same as the stock price itself, but in case of CFD you trade with your broker instead of buying equity. This approach also gives possibility to avoid intraday trading limitations for small accounts.
 

Enivid

Administrator
Staff member
Nov 30, 2008
18,532
1,355
144
Odesa
www.earnforex.com
CFD- It is a kind of derivative trading which allows traders to take advantage of price movements on underlying financial instruments like bonds, stocks and instruments etc. It is also used for hedging on equity indices & commodity. Traders make profit between the difference at what they buy or sell.
Spread Betting- Spread betting is a derivative strategy where traders don’t own the underlying assets they bet on. Rather spread bettors simply speculate on whether the asset’s price will rise or fall by using the prices offered to them simply by a broker.
This actually underscores their similarity rather than demonstrates their differences.