CFD vs Spread Betting: The Debate
CFDs, or contracts for difference, are similar to the practice of spread betting — both rely on the nature of change in the financial markets to be beneficial to one party or another. There are some clear differences between the two, though, and the CFD vs spread betting debate rages on.
In neither case does the person placing a wager own shares in a company, and thus neither allows the gambler a say in the decisions of the company nor ties them down to the fate of the said company. However, spread betting is a tax-free venture, whereas someone CFD trading will find themselves paying taxes thanks to Capital Gains Tax. CFD traders can be paid dividends, when applicable, but spread betters will not be awarded these. And the contract periods of CFDs can be changed and bargained for, but spread betting is based on fixed ownership, and a high cost may be applied if the owner wishes to roll the bet over.
In the UK, you have no currency risk as a spread better, so all of your bets will be calculated in pounds. CFDs are bought and sold in a similar manner to shares; it may be a fairly familiar system to those who have worked the stock market before.
All of this leads to a conclusion that when it comes down to it, the CFD and spread betting debate has no concrete right or wrong answer. It all depends on the style of the person placing the bets, and how they like to play the market. There is more long-term risk involved in spread betting, and more flexibility in CFDs; but by the same token, there is no tax collected on spread betting, while CFDs are seen as a source of income. Check out a CFD or spread betting forum while you study your options before choosing — or live dangerously and play them both!
Original content from Gr8 Free Articles.
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