Wall Street Vs Spread Betting
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Wall Street Vs Spread Betting
No capital gains tax 1
No commission, just our spread
Easy to bet in the currency of your choice – greater control of currency exposure
Deal on rising and falling markets
Leveraged access to the markets
No stamp duty
24-hour dealing
Use prices based on the underlying market
Direct market access (DMA) on forex 2 and shares
Losses can be offset against profits for tax purposes
Deal on rising and falling markets
Leveraged access to the markets
No stamp duty
24-hour dealing
Use prices based on the underlying market
Derivative product differences in detail
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. High volatility increases the risk of sudden, large or rapid losses.
To prioritise the service we give our existing clients, IG is not currently allowing any new positions on GameStop and AMC Entertainment.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. High volatility increases the risk of sudden, large or rapid losses.
To prioritise the service we give our existing clients, IG is not currently allowing any new positions on GameStop and AMC Entertainment.
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Spread bets and contracts for difference (CFDs) are both leveraged products – enabling you to open a position while putting up just a percentage of the capital. Though they share many benefits, there are key advantages unique to each.
Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening a trading account. We’re here 24 hours a day, from 8am Saturday to 10pm Friday.
The key difference between spread betting and CFD trading is how they are taxed. Spread bets are free from capital gains tax, while profits from CFDs can be offset against losses for tax purposes. There’s no stamp duty to pay with either product because you don’t take ownership of the underlying assets when you trade.
Both enable you to go long or short, though there are technical differences in how they work:
All spread bets have a fixed expiry date, while CFDs don’t expire (with the exception of futures). Professional traders can get DMA on forex and shares with a CFD trading account. 2
Learn about the advantages of spread betting and CFD trading – and see how you can get started – with IG Academy’s online course.
If you’re experienced in the financial markets, both spread betting and CFD trading can bring variety and range to your portfolio. You can see a full comparison in the table below.
The below example takes a short position on the FTSE 100 – using the same deal size, it compares the process and outcome of a spread bet and a CFD trade if the market falls as predicted.
The profit and net loss for placing this trade via spread bet or CFD is the same.
However, while spread bets are tax-free and you keep all your profit, CFDs can be subject to capital gains tax, depending on individual circumstance.
Because CFDs are subject to tax, you can offset losses you make via CFD as a tax deduction.
* Please note that tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
The below example demonstrates the differences between a spread bet and CFD trade on a long GBP/USD position, showing the outcome if the market rises as expected.
Find more examples of spread betting and CFDs .
Daily funded bets (DFBs) are long-term bets on the cash price of an underlying instrument. DFBs have no expiry date, so we make a cash adjustment to your account to reflect funding charges.
This makes no difference to the price you deal at or your potential profit or loss: it simply makes it easier to track per point movements.
* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
Enjoy flexible access to more than 17,000 global markets, with reliable execution
Trade on the move with our natively designed, award-winning trading app
With 45 years' experience, we’re proud to offer a truly market-leading service
Enjoy flexible access to more than 17,000 global markets, with reliable execution
Trade on the move with our natively designed, award-winning trading app
With 45 years' experience, we’re proud to offer a truly market-leading service
Log in to your account now to access today’s opportunity in a huge range of markets.
Browser-based desktop trading and native apps for all devices
We're clear about our charges, so you always know what fees you will incur
See how we've been changing the face of trading for more than 40 years
1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2 From 2 July 2018, regulatory interventions mean that certain products are unavailable to retail traders. As a result, we can only offer Forex Direct (forex DMA) to professional traders. To find out more about this, and to check whether you are eligible for a professional account, please see our professional account page.
3 Options are only available via spread betting accounts and professional CFD accounts.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.
CFD, share dealing and stocks and shares ISA accounts provided by IG Markets Ltd, spread betting provided by IG Index Ltd. IG is a trading name of IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. Both IG Markets Ltd (Register number 195355) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site is not directed at residents of the United States, Belgium or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
The placing of a bet that allows for a range of outcomes.
Trading a financial derivative – you deal on prices derived from the underlying market, not on the underlying market itself.
No expiry dates (excluding forwards).
You don’t pay capital gains tax or stamp duty. 1
You don’t pay stamp duty, but you do pay capital gains tax. However, losses can be offset as a tax deduction.
24-hour dealing on forex and major stock indices. During the underlying market hours for other markets. We also offer weekend trading on selected markets.
24-hour trading on forex and major stock indices. During the underlying market hours for other markets. We also offer weekend trading on selected markets.
Overnight funding on daily funded bets. Rollovers on forwards and futures.
Overnight funding on all markets, except futures. Rollovers on futures.
We profit primarily from spreads and funding, and hedge the majority of net client exposure. We accept a low level of risk, from which we can make a small profit or loss.
We profit primarily from commission, spreads and funding, and hedge the majority of net client exposure. We accept a low level of market risk, from which we can make a small profit or loss. The outcome of a client’s DMA 2 trade never has an impact on our profit or loss.
What kind of trading is it suitable for?
We make a dividend adjustment on equity and stock index spread bets.
We make a dividend adjustment on equity and stock index CFDs.
Yes, but CFDs can be more effective because of their tax-deductible benefits.
More than 17,000 markets, including: Forex Stock indices Shares ETFs and ETCs Metals Energies Spot metals Soft commodities Options 3 Interest rates Bonds Sectors Share forwards Forex forwards Daily stock index futures Stock index futures Daily oil futures
More than 17,000 markets, including: Forex Stock indices Shares DMA forex 2 DMA shares ETFs and ETCs Metals Energies Spot metals Soft commodities Options 3 Interest rates Bonds Sectors Stock index futures
You define the size of your deal by selecting the amount you want to bet per point of movement (£/pt). Profits and losses realised in currency you bet in.
You define the size of your deal by selecting the number of contracts or shares you want to trade. Each contract has a fixed value. Profits and losses realised in traded market’s base currency. GBP contracts available.
A spread on all markets. No commission. Funding adjustments (excluding futures and forwards).
A spread on all markets except shares. We charge a commission on share CFDs, but no spread. Funding adjustments (excluding futures).
Desktop dealing Mobile app (iPhone, Android) Tablet app (iPad) MetaTrader 4 ProRealTime
Desktop dealing Mobile app (iPhone, Android) Tablet app (iPad) L2 Dealer (DMA) 2 MetaTrader 4 ProRealTime
Introduction programme Interactive platform preview Demo account
Introduction programme Interactive platform preview Demo account
One contract. Each contract is worth £10 per point
£3100 Deal size x mid price x margin rate (5%)
£3100 Deal size x mid price x margin rate (currently 5%)
The market falls to 6150 by 10pm. This is the price our funding is calculated at. It continues to fall steadily until the next day, reaching 6120.
Overnight funding charge of £3.38 (One-month Libor (eg 0.4925%) minus 2.5% x value of deal x underlying level at 10pm) / 365 (-2.0075% x £10 x 6150) / 365
Overnight funding charge of £3.38 (One-month Libor (eg 0.4925%) minus 2.5% x value of deal x underlying level at 10pm) / 365 (-2.0075% x £10 x 6150) / 365
Overall market movement and profit/loss
6199.5 – 6120.5 = 79 Value of one point = £10 Gross profit = 79 x £10 = £790
6199.5 – 6120.5 = 79 Value of one point = £10 Gross profit = 79 x £10 = £790
1 pt spread: the underlying fell by 80 pts, but you benefited from a fall of 79. Funding deducted from cash balance: £3.38
1 pt spread: the underlying fell by 80 pts, but you benefited from a fall of 79. Funding deducted from cash balance: £3.38
If the underlying market rose to 6280 pts instead: 6280.5 – 6199.5 = 81 pts 81 x £10 + £3.44 (higher funding cost to account for higher market close at 10pm) £813.44 net loss
If the underlying market rose to 6280 pts instead: 6280.5 – 6199.5 = 81 pts 81 x £10 + £3.44 (higher funding cost to account for higher market close at 10pm) £813.44 net loss
Buy 1 contract at 1.55805 (1 contract = £100,000)
Notional value is $155,805 (or £100,000) and margin factor is 3.33%, so margin = $5188.3 (or £3330)
GBP/USD rallies overnight, and the position is held through 22:00 (London time)
Funding = amount per point x funding adjustment factor= $10 x 0.27 = $2.70 Where funding adjustment includes underlying tom-next rate and IG's charge for holding positions overnight which is no more than 0.0022% per day.
Funding = amount per point x funding adjustment factor = $10 x 0.05 = $0.50 Where funding adjustment includes underlying tom-next rate and IG's charge for holding positions overnight which is no more than 0.0022% per day.
$1145 15,695 – 15,580.5 = 114.5 Value per point = $10 114.5 x $10 = $1145
$1145 1.5695 – 1.55805 = 0.01145 Number of points = 0.01145 x 100000 = 114.5 114.5 x 10 = $1145
0.8 point IG spread (included) Funding cost = $2.70
0.8 point IG spread (included) Funding cost = $0.50
If the market dropped 114.5 points instead: $1145 + $2.70
Net loss = $1147.70
If the market dropped 114.5 points instead: $1145 + $0.50
Net loss = $1145.50
Spread Betting on the Wall Street Index and US Shares
Spread Betting vs CFD Trading: Key Differences | IG UK
Spread Betting Examples | Spread Betting Explained | City Index UK
Spread Betting vs CFDs | Capital.com
Wall Street Vs Spread Betting | * Одесса...
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Chapters
What is Spread Betting?
How to Spread Bet
Spread Betting Examples
Benefits of Spread Betting
Costs of Spread Betting
Risks of Spread Betting
Margin & Leverage
Spread Betting vs CFDs
Spread Betting Tips
Start Spread Betting
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Work through our Spread Betting examples for a better understanding on how to trade.
Spread betting is best explained using an example. Let’s say you want to trade indices and have spotted a trading opportunity in the Wall St index.
The Wall St index is currently trading at 20609.0 /20610.6
Spread bet prices are always quoted in pairs: the bid (sell price) and the offer (buy price). The difference between the two is known as the spread.
You think Trump's protectionist trade policies will benefit US stocks so you expect the Wall St Index to rise.
You decide to place a buy trade at £5 a point. This is known as going long and means that for every point the Wall St increases, you will make a profit of £5.
If it falls in value you will lose £5 per point.
As spread bets are a leveraged product you do not have to put down the whole value of the trade. Wall St's margin requirement is 5% which means you receive 20:1 leverage.
So if Wall St is trading at 20610.6 (Buy price) to place your trade you need a deposit of £5152.6, see the diagram below for how this is calculated.
The City Index platforms will automatically calculate the margin required to open the trade.
Remember, the higher the stake, the more money you need to deposit. You should always make sure that you have enough free equity in your account to sustain any losses and avoid being placed on margin call.
Good news: the Wall St index is up following the release of positive US economic data and the Wall St index rises as you predicted. The Wall St price is now 20666.0/20667.6
Having reached a comfortable level of profit, you decide to close out your position with a profit and you sell at 20666.0
You bought at 20,610.6 and sold at 20,666.0 which represents a 55.4 point gain in your trade which, when multiplied by your £5 stake nets you a £277 tax-free profit*.
As this is a daily funded trade, you will incur a small overnight financing charge if you hold your position open overnight. For information about overnight financing charges, including when you will be charged from, visit the help and support section of our website.
Let's look at what would have happened if the Wall Street index had fallen instead.
Over the next two days, the Wall Street falls to 20581.6/20583.2, putting your spread bet into an open loss.
Deciding to take your loss, you now close your trade at the new sell price of 20581.6 This represents a 29-point loss which, when multiplied by your £5 stake, leaves you with a £145 loss.
Let's say that after you exited your buy position, you suspect the Wall Street index will drop further. After doing further analysis, you re-enter the market but decide to ‘go short' by entering a sell position at 20570.0 with a stake size of £5. You set a stop loss 90 points above at 20660.0 and a limit order 90 points below the sell level at 20480.0.
You check your position on your smartphone some hours later. The Wall Street now has a value of 20475.0/204576.6. Your limit order was hit at 20480, so your position has been closed out with a 90-point gain, which when multiplied by your £5 stake, leaves you with a £450 profit.
Suppose that the Wall St Index had risen instead.
Some hours after placing your trade you check and see that the Wall Street has risen significantly. Thankfully you had your stop loss in place which cut your losses at 20,660.0. This would result in a £450 loss on your position.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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