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Old 06-10-2010, 05:40 AM   #9
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Re: What is a CFD?

adding to what Blowfish says - the important part to remember is that it is a BET.
(dont let the word spread confuse)

It is much like the FX brokers that offer varying levels of leverage and varying amounts you can bet on direction. There in lies a lot of the flexibility.

One point that I am not 100% sure of however is the taxation point of view. While everyone gets excited that the gains are tax free in the UK, does that not mean that losses are not tax deductible?
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Old 06-10-2010, 07:23 AM   #10

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Re: What is a CFD?

Quote:
Originally Posted by SIUYA »
adding to what Blowfish says - the important part to remember is that it is a BET.
(dont let the word spread confuse)

It is much like the FX brokers that offer varying levels of leverage and varying amounts you can bet on direction. There in lies a lot of the flexibility.

One point that I am not 100% sure of however is the taxation point of view. While everyone gets excited that the gains are tax free in the UK, does that not mean that losses are not tax deductible?
I believe they are not though might be mistaken. This appears to cover a lot of the ins and outs So is Spread Betting really tax-free?
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Old 04-13-2012, 04:04 PM   #11

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Re: What is a CFD?

I am from the US and I just found tradersway that lets me trade cfds.
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Old 04-13-2012, 07:03 PM   #12

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Re: What is a CFD?

Quote:
Originally Posted by BlowFish »
The charts are the same as the instrument you are betting on. It's pretty much like the FX bookies. You bet X pounds a tick/point on the movement of a financial instrument. So for example I could take a long bet on the ES at 5 quid a tick. The spread bet company will be the counter party though may chose to hedge their book in the real market if it gets too lopsided.
Hi Blowfish,

This is almost an accurate description, and it's interesting that you know that the spread bet company hedges their book (most people seem to imagine that they hedge each individual trade rather than their net exposure, which is ridiculous, not least because they allow spread-bettors to take positions that are smaller than the value of a single contract in the underlying market).

One thing that is unusual, however, is for the instrument the spread betting company quotes to track the underlying instrument directly. A typical instrument would track an actual index value rather than a futures contract. They give these names like 'SPX' or 'WALL STREET'. This means that you can't reliably use charts of the ES or even the Spooz to trade the 'SPX'. Hence you have to rely on the spread betting company's own charts and this means they can restrict the information with which they provide you (they don't typically provide volume data, for instance). In short, they 'make' the market.

If you're willing to pay a larger spread you can spread bet on instruments that do track an underlying futures market accurately, but the spreads make these completely unsuitable candidates for intraday trading.

Hope that's useful.

Bluehorseshoe
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Old 04-15-2012, 12:30 AM   #13

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Re: What is a CFD?

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Originally Posted by Tams »
because CFD are not permitted in the United States...
is that still the same?
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Old 08-14-2012, 06:44 AM   #14

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Re: What is a CFD?

A CFD is an agreement between an investor and a broker to exchange the difference between the value of an underlying asset a share, commodity or stock market index, for example at the time the contract was opened.
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