Difference between Spreadbetting and Forex
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Thread: Difference between Spreadbetting and Forex

  1. #1
    Hi,

    1) Can someone tell me what is the distinction between spreadbetting (on Currency Market ) and trading on forex apart from interest rates you get and taxation?

    2) I wish to exchange on forex, but if I begin trading on forex or spreadbetting as I am not going to leave overnight for the time being?

    3) My choices Brokers are: Spreadbetting: IGindex, GFT
    Forex: FXCM/DBFX (I like the platform).

    Can you recommend something different (please only recommend if you are using them for 1 year.

    4) What's the benefits and drawbacks of both spreadbetting (Currency Market ) and forex?

    Thank you

  2. #2
    Quote Originally Posted by ;
    I guess it depends to a certain extent in your level of investment.

    I think that the minimum spreadbet is 50p per pip, some businesses I think it's even #1. The advantages are obviously tax exemption on you winnings (unless it's your sole source of income - quite'gray' area), and the range of tools available to trade. The disadvantages would be the minimum bet size, and also you can't claim tax relief on your losses. There may be maximum bet limits as well.

    There might also be other (dis)advantages, ask the respective brokers why you should exchange their...
    Thanks,

    Can it be the interest rate which grabs interest of traders more than spreadbetting?

  3. #3
    Quote Originally Posted by ;
    Thanks,

    Can it be the interest rate which grabs interest of traders more than spreadbetting?
    I wouldn't think so, I think it's more likely to be something to do with the term'bet' as opposed to'trade', same difference but maybe not plogically. Don't forget spreadbetting is not readily available to US residents as far as I know, and they probably account for a high percentage of people in the business.

    Spread betting is still popular however, especially for sports.

  4. #4
    esziTochu
    Guest
    The main benefit of spreadbetting in the UK is it's tax free status. However you do have to be cautious with this tax free status. In case your spreadbetting is regarded as part of or connected to a business then your winnings are taxable and I would think any reduction may be offset against any tax obligation. Check the earnings website on the tax problem, there is some info but its not comprehensive. Another benefit is the ability to place your personal bet size although most companies do have a miinimum wager. Normally #1.
    Things to watch out for are the dimensions of spreads and most significantly in the event the business rolls your position every day do they charge a new spread every time they roll ie daily. If they do then do not use that company. I have used GFT for a long time without issue.

    Hopes this helps.

  5. #5
    Quote Originally Posted by ;
    the primary benefit of spreadbetting in the UK is it's tax free status. However you do need to be careful with this particular tax free status. In case your spreadbetting is deemed to be part of or connected to some company then your winnings are taxable and I'd think any reduction may be offset against any tax obligation. Check the revenues site on the tax problem, there's some advice but its not comprehensive. Another benefit is the ability to set your personal bet size though most firms do have a miinimum wager. Usually #1.
    Things to watch out for would be the dimensions...
    Thanks a lot for clearing this for me.

  6. #6
    It is difficult enough to trade profitably with a real ECN broker who in theory is indifferent to whether you win or lose, but if you're gambling against a bucket-shop, you can'spreadbet' your bottom dollar they're likely to make it nearly impossible for you to make money from them in the long-run particularly if your time horizons are anything under a couple of days. I read an interesting thread at another forum concerning a particularly popular spreadbetting firm (CS), and the rep was quite clear about it; they won't tolerate a winning trader on their novels. I have tried a few which I won't specify and've found them to fall woefully short of those standards that I expect, which isn't to say there are not outfits out there which are okay.

    It appears that there are two types of spreadbetting businesses - those who are blatant bucket stores, and those who have creatively structured their business so they are identical to some regular Foreign Exchange broker but give it the name'spreadbetting', which will be probably no more than a marketing ploy. Some claim to be ECN. There was one that caught my attention called Prospreads which did look promising with Direct Market Access functionality and quite competitive spreads but I never followed up it as the minimum bet increments were a bit stiff for my liking.

    Always do your due diligence prior to depositing money with a broker.

  7. #7
    Quote Originally Posted by ;
    I read an interesting thread at another forum about a specially popular spreadbetting company (CS), and the rep was very clear about it; they won't tolerate a winning trader in their novels.
    That is some entrance, I wonder whether the rep is still working for them!

    I've just opened an account with ETX (really a mate did as I have already had one promotion), it's a risk free 250 quid promotional deal, it is going to be intriguing to see how it plays out if the preceding is the norm for these shops.

    The plan is to progress from the free #250 to a couple thousand, then proceed on to a regular store ie Oanda/FXCM/GFT etc, then on to an ECN. . .the target is 2m in two years from starting out with zero. I say it can be achieved, and across the way lock in some profit, worst way is that we lose nothing so it seems like a reasonable risk:reward, lol

  8. #8
    yeszCuneses
    Guest
    Quote Originally Posted by ;
    But you do need to be cautious with this tax free status. If your spreadbetting is regarded as a part of or connected into some company then your winnings are taxable and I would think any reduction could be offset against any tax liability. Check the earnings website on the tax issue, there is some advice but its not comprehensive.
    I don't understand where do you guys keep getting this information?Spread Betting is tax free and it always was. Full Stop

  9. #9
    Quote Originally Posted by ;
    Hi,

    1) Can someone tell me what's the difference between spreadbetting (on forex) and trading on Foreign Exchange apart from interest rates you receive and taxation?

    2) I want to exchange on Foreign Exchange, however should I begin trading on Foreign Exchange or spreadbetting like I am not going to leave overnight for now?

    3) My choices of Brokers are: Spreadbetting: IGindex, GFT
    Forex: FXCM/DBFX (I like the platform).

    Could you recommend something else (please only recommend if you're using them for 1 year....
    I guess it depends to a certain extent on your level of investment.

    I feel the minimal spreadbet is 50p a pip, a few businesses I think it's even #1. The benefits are clearly tax exemption on you winnings (unless it's your only source of income - quite'gray' area), and also the range of tools available to trade. The disadvantages are the bet size, and also you can't claim tax relief. There could possibly be bet limits also.

    There may also be other (dis)benefits, ask the respective brokers why you should exchange their merchandise over the other.

    If you elect for spreadbet then do your study, businesses are fighting business at this time and it's a fantastic time to have some free money or risk free trading!

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