CFDs vs Spread Betting

There are many similarities between CFD trading and financial spread betting, with unique advantages to both products.

Here we’ll go through some of the similarities and differences between the two financial markets that you’ll experience while trading with ThinkMarkets.

The similarities

Trading Leverage

Trading on leverage

Both CFDs and spread bets are leveraged products, allowing you to maximise profits with a smaller initial investment (although don’t forget that losses can be increased too).

No Stamp Duty

No stamp duty

As you don’t own the underlying assets when either CFD trading or spread betting, both products are currently exempt from stamp duty* in the UK.

Rise and Falling Markets

Rising and falling markets

Unlike traditional shares trading, you’re capable of trading both rising and falling markets in both CFD trading and spread betting.

24 Hour Trading

24-hour trading

Both CFD and spread bet markets are available around the clock during the trading week, allowing you to capitalise on market movements at any time of the day.

The Differences

Contract size

With spread betting, the contract size is an amount of money per point, determining whether the market rises or falls. On the other hand, with CFD trading you buy or sell contracts which represent an amount per point in the underlying market.

Tax

Spread betting is currently exempt from capital gains tax* in the UK, while CFDs are liable to tax deductions. You can offset CFD losses against future profits gained, which can make CFD trading an efficient way to hedge your funds with a physical shares portfolio. 

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Losses can exceed deposits
Losses can exceed deposits. Ensure you fully understand all risks involved and seek independent advice if necessary.
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