Spread Betting Vs Forex Trading

Spread Betting Vs Forex Trading
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Costs are very similar, the major difference is a mere technicality that in forex you have fixed pip size and fixed leverage and you get to choose your trading size in lots whereas in spread betting you define the value of a pip by setting leverage. You can use the same strategies as long as you have a good charting package.
Jan 11, 2022 In spread betting , you do not own an actual instrument or contract, you are just betting on price movements, and your profit or loss is determined by the outcome of that bet. The second difference is that with CFDs you do not have a time limit on the contracts, whereas in spread betting there is a defined period of time for the bet to expire.
Jun 2, 2022 The spread is essentially the difference between the bid and ask price, which is where the broker makes a profit. You bet on whether the price of the currency pair will be lower than the bid price or higher than the ask price. Let us consider the EUR/USD pair. The brokerage quotes an ask price of 1.0015 and a bid price of 1.0010.
PROFIT THROUGH THE FALL OF THE MARKET: Forex trading and spread betting offer profit from the falling market to traders. Forex trading is one of the most severe and prevalent transactions. On the other hand, spread betting is a type of gambling. Many traders prefer to spread betting over Forex trading .
From a trading and execution stand-point there's no difference between the forex trading account and spread betting account. The same platform is also used for each. Spread betting is tax free due to the UK tax code. So if you reside in the UK, then it's in your best interest to trade a spread betting account.
Spot forex requires an investor to buy and sell currency pairs at the current market spot price, whereas spread betting allows the trader to speculate on the price movements of the underlying asset, without taking ownership. Many independent spot forex brokers charge tax on profits, as there will be some sort of ownership involved.
Forex spread betting is a category of spread betting that involves taking a bet on the price movement of currency pairs. A company offering currency spread betting usually quotes two prices, bid...
Forex spread betting allows you to profit from falling as well as rising exchange rates, and you can limit potential losses by using automatic or manually-applied stops. In addition the high volatility of certain currency pairs suits this trading product. This doesn't mean that forex trading is easy. In fact some say that with FX it is even ...
Forex brokers will quote you two different prices for a currency pair: the bid and ask price. The " bid " is the price at which you can SELL the base currency. The " ask " is the price at which you can BUY the base currency. The difference between these two prices is known as the spread . Also known as the " bid/ask spread ".
Jan 21, 2022 Spread betting allows investors to speculate on the price movement of a wide variety of financial instruments, such as stocks , forex , commodities and fixed income securities. In other words, an...
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Home » Education » Finance education » Difference Between Spread Betting and Trading
Trader since 2007. Currently work for several prop trading companies.
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Nowadays, in the interconnected global economy, foreign exchange is an important part. But many investors think that Forex trading and spread betting are similar and much alike. But there are so many DIFFERENCES BETWEEN SPREAD BETTING AND FOREX TRADING. You should know the difference between them. The vital difference is the mode of transaction. You should know that spread betting is very much popular and considered a type of gambling according to the rules and regulations of the United Kingdom. But on the other hand, Forex trading is regarded as the mode of hypothetical investment. Forex trading belongs to CFD trading.
The main differences between spread betting and CFD trading are:
1. TAX: The implication of tax in spread betting and Forex trading is the main difference. When dealing with Forex trading, you do not win any underlying asset, so you do not need to stamp duty charges. So, your profits are exempt both from capital gain and stamp duty. However, the profits are subject to a capital tax gain. On the other hand, spread betting is different. It is one kind of gambling. There are no physical selling and purchasing.
2. WHO CAN TRADE: Forex trading is available for all traders from all over the world. But on the other hand, spread betting is restricted to the people of Ireland and the UK. So, before opening your trading account, you need to check whether it is regulated and permitted in your country or not.
3. TYPE OF ACCOUNT: In the case of spread betting, most companies may offer you an individual account. But in the case of Forex trading, you can get the option between personal and corporate accounts.
4. FEES: In Forex trading, the fees come in the form of commission charges. But in the case of spread betting, the fees are included in spreads, and there are no extra commission charges.
5. EXPIRY DATE: In the case of spread betting, the expiry date is far in the future. But in the case of Forex trading, the account will not expire.
6. HEDGING: In spread betting, it is possible due to their tax system. But Forex trading is far more suitable and applicable for hedging.
7. ISLAMIC RULE: Spread betting is recognized as a form of gambling, and in Islamic law, it is not acceptable. But Forex trading is proper in Islamic law. So, brokers offer an exceptional opportunity to Muslim traders and open an Islamic account.
8. LEGAL ISSUE: As you can see that spread betting is limited in small geographical coverage. It is solely legal in Ireland and the UK. But from Canada, it also receives some transactions. In the United States, it is banned and prohibited. So the most significant benefit is the tax-free profit. But in the case of Forex trading, there are no issues related to legalities and acceptance. Forex trading is acceptable all over the world and open to all customers.
1. PURCHASE: These both are leveraged items. So, you can make your profit by investing small and also increasing your position size. Then, with the help of the 5% margin, you can hold the position. But these two are varied between providers. You can get the facility of a margin calculator on most of the platforms to measure.
2. ACCESSING THE MARKET: With both, you can invest in thousands of markets. For example, you can invest in stock shares—cryptocurrencies, gold, ETFs, and futures.
3. ACCESSING PLATFORMS: You can get various online options for both Forex trading and spread betting. Platforms are available in mobile applications and desktops. For example, you can use the popular platform named MetaTrader4.
4. PROFIT THROUGH THE FALL OF THE MARKET: Forex trading and spread betting offer profit from the falling market to traders.
Forex trading is one of the most severe and prevalent transactions. On the other hand, spread betting is a type of gambling. Many traders prefer to spread betting over Forex trading. There are no tax obligations in spread betting. It is very much difficult and tricky to say which is better. But if you want to get a tax-free profit, then spread betting is suitable for you. You need to learn the differences and go ahead.
and for the end, let us compare spread betting and stock trading:

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Post # 1 Quote First Post :

Jul 8, 2009 12:05pm

Jul 8, 2009 12:05pm

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Joined May 2009

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Status: Member

| 168 Posts

Alright. I'm not exactly new to trading, but I'm not an expert either. Can someone help me with the difference between spread betting and forex trading? I opened a demo account with FXCM UK and I can't seem to find the difference other than pip value. Am I missing something?

Post # 2 Quote

Jul 8, 2009 1:29pm

Jul 8, 2009 1:29pm

Joined Jun 2008

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Status: member

| 577 Posts
Alright. I'm not exactly new to trading, but I'm not an expert either. Can someone help me with the difference between spread betting and forex trading? I opened a demo account with FXCM UK and I can't seem to find the difference other than pip value. Am I missing something?
Post # 3 Quote

Jul 8, 2009 1:53pm

Jul 8, 2009 1:53pm

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Additional Username

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Joined May 2009

| 305 Posts

Spread Betting doesn't have spread.
But it is gambling so it's not halal for muslim traders.

Post # 4 Quote

Jul 8, 2009 2:53pm

Jul 8, 2009 2:53pm

Joined Jun 2009

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Status: FXCM Representative

| 5,808 Posts
Alright. I'm not exactly new to trading, but I'm not an expert either. Can someone help me with the difference between spread betting and forex trading? I opened a demo account with FXCM UK and I can't seem to find the difference other than pip value. Am I missing something?
Post # 5 Quote

Jul 8, 2009 3:56pm

Jul 8, 2009 3:56pm

Joined Apr 2006

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Status: Suaviter in modo, fortiter in re

| 1,851 Posts
Alright. I'm not exactly new to trading, but I'm not an expert either. Can someone help me with the difference between spread betting and forex trading? I opened a demo account with FXCM UK and I can't seem to find the difference other than pip value. Am I missing something?
Post # 6 Quote

Jan 10, 2010 7:18am

Jan 10, 2010 7:18am

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Joined Aug 2009

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Status: Member

| 7 Posts

They work in the same way... the main difference between financial spread betting and forex is that financial spread betting offers a wide range of markets, including forex, indices, shares, etc.
Thus if you're interested in trading forex I'd recommend you go for financial spread betting account. http://www.independentinvestor.co.uk/spread_betting/ - find out more about spread betting and compare dozens of financial spread betting accounts.

Post # 7 Quote

Edited at 11:34pm

Oct 20, 2014 2:49am

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Edited
at 11:34pm

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Joined Apr 2014

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Status: Member

| 57 Posts
They work in the same way... the main difference between financial spread betting and forex is that financial spread betting offers a wide range of markets, including forex, indices, shares, etc. Thus if you're interested in trading forex I'd recommend you go for financial spread betting account. independentinvestor.com/spread-betting/ - find out more about spread betting and compare dozens of financial spread betting accounts.
Post # 8 Quote

Oct 20, 2014 12:20pm

Oct 20, 2014 12:20pm

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Commercial Member

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Joined Jan 2013

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Post # 9 Quote

Oct 20, 2014 11:29pm

Oct 20, 2014 11:29pm

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Joined Apr 2014

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Status: Member

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Post # 10 Quote

Oct 22, 2014 5:20pm

Oct 22, 2014 5:20pm

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Commercial Member

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Joined Jan 2013

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{quote} Spread betting and CFDs are almost the same but there are two main difference: spread betting is tax-free (at least in the UK) and with spread betting you trade in the currency of your choice across all the markets whereas with CFDs you trade in the currency of the underlying asset (for example, if you buy FTSE100 shares then you deal in £, but if you trade US shares then you trade in $).
Post # 11 Quote

Oct 30, 2014 8:29pm

Oct 30, 2014 8:29pm

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Joined Jan 2012

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Status: Just Pippin'

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What about the upstream process? Although it probably rarely happens in spot forex, a trade in spot forex can be sent upstream. however, is the broker just taking on the risk on the other side with spread betting?

Post # 12 Quote

Nov 5, 2014 4:09pm

Nov 5, 2014 4:09pm

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Joined Oct 2014

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Status: Member

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Do you get taxed over a certain value??? If not - WOW! This is my new adventure.

Post # 13 Quote

Nov 5, 2014 4:09pm

Nov 5, 2014 4:09pm

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Joined Oct 2014

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Status: Member

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Post # 14 Quote

Nov 5, 2014 7:15pm

Nov 5, 2014 7:15pm

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Joined Apr 2014

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Status: Member

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you don't get taxed if you spread bet but you do pay tax and cfd and forex trades.

Post # 15 Quote

Nov 9, 2014 1:25pm

Nov 9, 2014 1:25pm

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Joined Nov 2014

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Status: Junior Member

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I have been spread betting for 15 years here in the UK because it's tax free. The only tax that is paid is the profit the broker makes on 'the spread' ie buy at 100 sell at 110 then the spread is 10 which the broker takes whether win lose or break even and he would normally be taxed on that as its counted as profit. We have a similar system for horse racing you can choose to pay tax on the bet say £5.00 + tax and then there is no tax for winnings, you can elect not to pay tax on your bet (horse racing) but you would pay tax on winnings. Like our cricket rules, very British.

Post # 16 Quote

Nov 28, 2014 7:07pm

Nov 28, 2014 7:07pm

Joined Nov 2014

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Status: Member

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I have been spread betting for 15 years here in the UK because it's tax free. The only tax that is paid is the profit the broker makes on 'the spread' ie buy at 100 sell at 110 then the spread is 10 which the broker takes whether win lose or break even and he would normally be taxed on that as its counted as profit. We have a similar system for horse racing you can choose to pay tax on the bet say £5.00 + tax and then there is no tax for winnings, you can elect not to pay tax on your bet (horse racing) but you would pay tax on winnings. Like our...
Intelligence is the ability to adapt to change. Stephen Hawking
Post # 17 Quote

Mar 25, 2015 6:23am

Mar 25, 2015 6:23am

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Joined Jan 2011

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Status: Junior Member

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what happen to the tax free if i'm not the UK resident?

Post # 18 Quote

Mar 25, 2015 6:12pm

Mar 25, 2015 6:12pm

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Joined Feb 2015

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Status: Member

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Post # 19 Quote

Apr 9, 2015 11:36am

Apr 9, 2015 11:36am

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Joined Mar 2015

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Status: Member

| 5 Posts

There seems to be quite a few mixed messages in here.
Firstly if you spread bet and it is your sole source of income then you do have to pay Tax in the UK. If it is not your sole source of income then you do not have to pay tax.
Spread betting is only available to UK residents.
Different spread betting providers will have different types of accounts... there is not one blanket statement that will accurately describe all spread betting accounts. Some providers can simply put a legal wrapper on a normal FX account like an MT4 account allowing you to trade normally but benefit from paying no tax if it is not your sole source of income. Some other brokers will offer you the more traditional spread betting account where the trade is not determined by the nominal value as with MT4 (the number of lots you are trading) it is determined by the PnL per point that you want to make on the trade. Ultimately both offer you a vehicle for profiting or loosing in the markets but they are just different ways of doing the same thing.

Post # 20 Quote

Apr 16, 2015 3:01pm

Apr 16, 2015 3:01pm

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Joined Apr 2015

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Status: Junior Member

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Hi Guys
I have just finished a course on trading but now looking for a good spread betting brokerage to go with can anyone advise me on any good ones in the UK please.

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider . You should consider whether you understand how spread bet
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Spread Betting Vs Forex Trading

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