CFDs vs spread betting

Spread betting and CFD trading share many benefits, and there are key advantages unique to each

Spread betting

No capital gains tax*
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

CFDs

Direct market access (DMA) on forex and shares
Trade at the market price on 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

Which is best for me?

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.

Spread betting could be for you if…

You want any profits to be tax-free*
You want to control the size of your deal
You want to deal shares in smaller sizes and not be penalised by a minimum commission
You want to deal all international markets in sterling
You want to take a longer term view on forex and shares with forward markets

CFD trading could be for you if…

You’re already comfortable with the underlying market and its terminology, so want a product that feels similar
You want to use DMA for shares and forex trading, while getting our OTC benefits
You want to offset losses against profits as a tax deduction
You want a corporate or professional trading account
You are hedging physical assets in your portfolio
You want an efficient way to hedge using the tax-deductible benefits of CFDs

What are the technical differences?

A financial spread bet allows you to speculate on the financial markets; you are not trading the markets, you’re betting on a range of potential outcomes based on the underlying data. All spread bets have a fixed expiry date.

A CFD is a financial derivative: you trade a contract based on prices derived from the underlying market. Via DMA, you trade a CFD and we place a parallel trade in the market. CFDs don’t expire, excluding futures, digital 100s and options.

The differences in detail

Spread betting

CFD trading

What is it? 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.
Are there expiries? Fixed expiry dates. No expiry dates (excluding forwards, options and digital 100s).
Do I pay tax? You don’t pay capital gains tax or stamp duty*. You don’t pay stamp duty, but you do pay capital gains tax. However, losses can be offset as a tax deduction.
When can I trade? 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.
Do I pay to keep positions open? Overnight funding on daily funded bets. Rollovers on forwards and futures. Overnight funding on all markets, except futures. Rollovers on futures.
Does IG profit if I lose?  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 trade never has an impact on our profit or loss.

What kind of trading is it suitable for?

Intra-day

Daily

Medium-term

Intra-day

Daily

Medium-term

Can I receive dividends?

We make a dividend adjustment on equity and stock index spread bets.

We make a dividend adjustment on equity and stock index CFDs.

Can it be used for hedging?

Yes, but CFDs can be more effective because of their tax-deductible benefits.

Yes

Can I open a corporate account?

No

Yes, we offer corporate accounts.

Range of markets More than 10,000 markets, including:

 

Forex

Stock indices

Shares

DMA forex

DMA shares

ETFs and ETCs

Metals

Energies

Spot metals

Soft commodities

Options

Digital 100s

Interest rates

Bonds

Sectors

Share forwards

Forex forwards

Daily stock index futures

Stock index futures

Daily oil futures

More than 10,000 markets, including:

 

Forex

Stock indices

Shares

DMA forex

DMA shares

ETFs and ETCs

Metals

Energies

Spot metals

Soft commodities

Options

Digital 100s

Interest rates

Bonds

Sectors

Stock index futures

Share forwards

Forex forwards

Daily stock index futures

Daily oil futures

The mechanics of dealing 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.

The charges 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).

Dealing platforms

Desktop dealing 

Mobile app (iPhone, Android, Windows) 

Tablet app (iPad) 

DMA

MetaTrader 4

ProRealTime

Desktop dealing (OTC & DMA)

Mobile app (iPhone, Android, Windows)

Tablet app (iPad)

L2 Dealer (DMA)

MetaTrader 4

ProRealTime

Direct market access

No

Yes, for forex and shares

Getting started

Introduction programme

Interactive platform preview

Demo account

Introduction programme

Interactive platform preview

Demo account

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