advantage of forex brokers is the platform flexibility. # There is a hot debate going on whether gains from spread betting will or will not remain tax-free if they are one's main source of income. It is not however suitable for intraday trading, since the house controls the spreads, not the market participants. This is because they can only pass on trades in blocks of 1 full lot. However, you cannot write off losses against tax where you can with trading accounts. Having said all that, forex trading and spreads are quite similar these days and the analysis and technicals involved in predicting how the foreign exchange markets move apply equally to both instruments. # Spread betting also offers the spread better increased leverage. You get a certain amount a year as a tax-free allowance. A lot of people have out-of-date and/or even prejudiced information about spread-betting.
Spread trading is technically speaking a form of gambling as opposed to investing. I'm only interested in my PnL, not theirs! Scenario: Forex Broker, if you make this similar trade through an Forex broker, you will buy 1 micro lot with a pip value of 1USD, risk 4 of your account with the same stop loss/take profits levels as above. Now that competition among spreadbetting firms is increasing some of them have realised that making and keeping it trader-friendly is the way forward and its improving all the time. If the terms of the trade for both groups are the same then you have the same leverage with both the spread betting isnt a non-leveraged trade. Those that argue otherwise have not checked these facts properly and might be surprised at what they find. Spread betting is free of CGT and income tax for the vast majority of retail traders, which can be a significant advantage albeit this also means that it isnt possible to offset trading losses against any gains made to minimise Capital Gains Tax in other. To me, the differences are (i) that the spreads are typically smaller with Capital Spreads, (ii) the customer service is typically better and (iii) the profits are completely tax-free from "betting" but not from "investment".
Spread betting is different from the traditional forex trading in various ways.
In spread betting, there is no actual exchange of the currency or purchase of the financial instrument that is being traded.
In traditional forex trading, the betting has to put down the entire amount of forex trade, so the spread or loss is limited to the amount the trader has put down in the trade.
Spot trading being a long established industry is regulated to a higher extent, as compared to spread betting.
I am new to both, but I have a feeling that the mechanics of forex trading and forex spread betting are very similar? However, it's easy enough to get the feel for. You just decide how much you want to "bet". Leverage: 100:1, buy: 1 std lot EUR/USD @.3228 132,280. Ayondo in London, which I use every day.
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