78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Difference between spread betting & CFD trading

Spread betting and CFD trading are margined products and can provide similar economic benefits to investments in shares, indices, commodities and currencies. 

A form of financial derivatives trading, spread betting is popular with UK residents because profits are exempt from capital gains tax and stamp duty*. 

See below for some of the main characteristics of spread betting and CFD trading.

Spread betting vs CFDs

FeatureSpread bettingCFD trading
Tax-efficient tradingUnlike share trading, profits made from spread betting are exempt from stamp duty and capital gains tax (CGT) in the UK*.Since you don't own the underlying asset when trading CFDs, there is no stamp duty to pay*. However, you will be subject to capital gains tax.
Who can spread bet and trade CFDs?Only available to customers who reside in the UK or Ireland.Available to customers globally.
Short sellingYou can go long as well as short so you can take a long position when market prices are rising or open a short position when prices are falling.Ability to go long as well as short so you can take a long position when market prices are rising or open a short position when prices are falling.
Commission chargeWhen spread betting shares on our platform, no additional commission will be charged to your account. When trading CFD shares on our platform, a commission will be charged to your account upon execution of any order. This is in addition to the spread.
Spreads and holding costsAn additional spread is built into the prices displayed on our platform, which is applicable upon execution of any order. Holding costs may apply to spread bets.With CFDs, holding costs may apply.
Calculating profit and lossTo calculate your profit or loss, find the difference between the price at which you enter and the price at which you exit, then multiply this difference by your stake.With CFDs, your profit or loss is determined by the difference between the price at which you enter and the price at which you exit, multiplied by the number of CFD units.
Margined trading**Spread betting is a financial leveraged product, which means you only need to deposit a small percentage of the full value of the spread bet in order to open a position.CFDs are a leveraged product, which means that you only need to deposit a small percentage of the full value of the trade in order to open a position. 
Spread betting vs CFDs

Open a live account

Unlock our full range of products and trading tools with a live account.

Losses can exceed your deposits.

Free demo account

Practise trading risk-free with virtual funds on our Next Generation platform.

How does spread betting work?

When you spread bet, you choose whether the price of a product or financial instrument (such as a share, stock index, currency pair or commodity) is likely to go up or down, and decide how much to bet. The amount you wish to bet per point of movement in price is your stake. ​

If the product's price moves in your favour, your profit is calculated by multiplying your original stake size by the number of points the instrument has moved. If it goes against you, your loss will be calculated in the same way. Remember, losses can exceed deposits. 

Learn more about spread betting with CMC Markets.

How do CFDs work?

When trading CFDs, you buy or sell a number of units or a specific amount of CFDs in an instrument, similar to the way you would when trading physical instruments. With CFD trading however, you don'​​t own the underlying asset and have the ability to trade on margin. This allows you to take a position with a notional value of much more than the amount of money you are required to deposit.**  

Want to learn more about CFD trading with CMC Markets?
 

*Tax treatment depends on your individual circumstances. Tax law can change or may differ in a jurisdiction other than the UK.

**Remember, when trading on margin the amount you will be required to deposit reflects a percentage of the full value of the position. This means that your losses will be amplified and you could lose more than your deposits. Trading using margin is not necessarily for everyone and you should ensure you understand the risks involved and, if necessary, seek independent professional advice before placing any trades.

Test-drive our trading platform with a practice account

CMC Markets

Experience our powerful online platform with pattern recognition scanner, price alerts and module linking.

  • Fill in our short form and start trading
  • Explore our intuitive trading platform
  • Trade the markets risk-free

Live account

Access our full range of markets, trading tools and features.

Open a live account

Demo account

Try spread betting with virtual funds in a risk-free environment.

Open a demo account

Demo account

Try CFD trading with virtual funds in a risk-free environment.

Live account

Access our full range of products, trading tools and features.

TOP

This website uses cookies to optimise user experience. You can amend your cookie preferences by accessing our cookie policy.

Close
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.