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TOPIC: Advice

Advice 19 Feb 2014 14:27 #1

  • MaxinesDad
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Thanks Amo, much appreciated taking the time to look that up.

Tom aka MD
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Advice 19 Feb 2014 14:17 #2

  • Amo
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I asked the same questions quite a while back :

chartsview.co.uk/general-trading/473-cfd-v-sb#2124

Remo's answer on there.

One thing I found is if you are trading indices with CFD's as opposed to SB the minimum size you can trade is generally higher with CFD's. As some know on here my CFD trading was quite a disaster but I guess that was more due to my own poor money management than the type of trade.

All the best whichever you choose.
Amo
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Advice 19 Feb 2014 14:15 #3

  • MaxinesDad
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Thanks Jacko, much appreciated as ever.

Tom aka MD
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Advice 19 Feb 2014 14:08 #4

  • Jackozy
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Hi Tom,

There's not really any difference in terms of risk between CFDs and SBs as far as I'm aware - they're both leveraged products with the leverage dependant upon the market you're trading.

SB's tend to offer less favourable entries and exits as they usually operate slightly outside the spread so, for example, if your chosen market has a spread of 134/136 an SB buy might get you an entry at, say, 136.8 whereas with CFDs you could use DMA (Direct Market Access) to allow you to buy at the 134p mark in the same market/spread (or 136p without DMA). The same applies when you close - CFDs offer more favourable prices.

It might also be the case (others will have to confirm) that you may have much more restricted trading in SBs - can markets be closed on open positions? I'm not sure.

The main difference for most is the tax regime but I'm sure you know about that.

I remember this topic being discussed either on here or III's CV before and remo (IIRC) said he prefers CFDs but I can't remember the reasons he gave. I, too, always use CFD but I don't have the same tax considerations UK residents have.

A lot will depend on your position sizes, targets and the market you're trading as to which is best. Clearly, if you're looking to trade a share for a big move then the spread is less of a concern than the tax on any profits; if you're looking to scalp 10/20 pips on the FX market then spread is more of an issue than tax.

The key issue for me is the leverage factor for people who are new to these and are just used to using 100% cash to trade shares. Margin trading is a completely different world and I would certainly recommend playing about with a CFD or SB demo account before putting real money at risk.

Hope that helps.

ATB.
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Advice 19 Feb 2014 13:42 #5

  • MaxinesDad
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Amo

I have had a SB account with IG for a number of years and have been trading but not too seriously so far. I understand and accept the risks involved but feel the time is fast approaching for me to move to the next level. I am just curious about people's views regarding CFDs vs SB.

Thanks for your response.

Tom aka MD
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Advice 19 Feb 2014 13:37 #6

  • Amo
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I'm not sure what level you at as a trader but from my experience I would say use SB's with minimum trade size until you have completely mastered money management and taken the emotion out of your trading as much as possible.

Only then even consider looking at CFD's.
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Advice 19 Feb 2014 11:53 #7

  • MaxinesDad
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I get the impression most traders tend to use CFDs in preference to spread bets. I know the spread is smaller on CFDs but given the commission and potential tax liabilities do CFDs really work out as the best option.

I am curious to find out what people's views are and why before I perhaps embark on a more serious journey into the world of trading.

I have been trying to educate myself for the past x number of years with the help of all the useful posts and hints by people on this board and the former iii chartsview group.I would like to thank all of you for your valuable input and insight. Most helpful.

Tom aka MD
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