How do spread betting and CFDs differ when it comes to trading digital currencies?

1 answers

• Nov 23, 2021 · 3 years ago
  Spread betting and CFDs are two popular ways to trade digital currencies, but they have some key differences. Spread betting is a form of gambling, where you bet on the price movement of a digital currency without actually owning it. CFDs, on the other hand, are contracts that allow you to trade the price movement of a digital currency without owning the underlying asset. With spread betting, you can potentially make unlimited profits, but you can also lose more than your initial investment. With CFDs, your potential losses are limited to the amount you invest. Spread betting is tax-free in the UK, while CFDs are subject to capital gains tax. Both methods allow you to trade on margin, which means you can trade with borrowed money. However, the leverage available for spread betting is usually higher than for CFDs. In conclusion, spread betting and CFDs offer different advantages and disadvantages, and it's important to understand the risks involved before deciding which method to use.
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