Spread Betting on cTrader Explained

Does cTrader Support Spread Betting

This is not a very well publicised fact about cTrader. But it is true that the cTrader platform does indeed support Spread Betting. The companies website, in fact, has an entire web page detailing exactly how Spread Betting on cTrader works. According to the product page, Spread Betting is basically just another account type, alongside Hedging accounts and FIFO Netting accounts. This allows traders to be able to seamlessly switch between different account types in the platform. 

cTrader Spread Betting
Spread Betting Explained on Spotware’s Website

Spread Betting is a phenomenon that is pretty much isolated to the UK market. This is mainly due to taxation laws. In the UK, any gains (profits) from CFD trading would be liable for Capital Gains Tax. However, in the UK, Spread Betting providers are regulated by the Financial Conduct Authority and usually offer them alongside CFD products. But when it comes to taxation, they are considered as gambling winnings and are therefore not liable for Capital Gains Tax. This is what makes Spread Betting so attractive. UK investors are still able to speculate on financial products and trade them with leverage but don’t need to pay taxes, which they would on CFD products. This makes them a great alternative to CFDs. 

What is the Difference Between Spread Betting and CFDs

The main difference between Spread Betting and CFDs is the context of how you place an order. With CFDs, you select a Lot size or volume of units. For example 1 Lot or 100,00 EUR/USD. Whereas, with Spread Betting you would select how much you are prepared to win or lose for each pip the market moves in or against your favour. This is known as Stake. In Spread Betting the equivalent of 1 Lot of EUR/USD would be a Stake Size of 10 Euro. 

Is Spread Betting Similar to Binary Options

In some ways, Binary Options is similar to Spread Betting. Mainly because in both contexts you set your risk as a monetary value. This is how they are both different from CFD trading, where you set your risk in the context of the number of units for the underlying asset that you want to speculate on. In Binary Options you would place a wager, this is how much want to risk, it’s similar to your stake size in Spread Betting. In Binary Options, your wager is the most you are able to lose. Whereas in Spread Betting, your stake is how much you will earn or lose for each Pip. Binary Options are an all-or-nothing bet. You are either in the money or out of the money. If you win, you will get the entire payout amount, which could be for example 80%, I.e. $80 for a $100 wager. With Spread Betting, on the other hand, you can theoretically win an unlimited amount, or lose your entire account balance. In a lot of respects, this is what makes them more similar to CFDs than Binary Options which are most closely related to betting on a football match. 

Why are Regulators Banning Binary Options not Spread Betting

Because Binary Options are essentially a high-or-low style bet and because the platforms developed to offer them are incredibly bare-bones, it was far too easy to rig the game. There have been countless cases where regulated and unregulated Binary Options providers have been caught doing so. Before the end, Binary Options became a global epidemic which eventually involved the United States FBI. Spread Betting and CFD trading never caught that much attention. From the regulators perspective, Binary Options are too dangerous and by design completely untransparent. Spread Betting and CFDs, on the other hand, are much more aligned with the real financial markets, thus regulators are not banning them but making sure they are only being offered to appropriate investors. 

cTrader Brokers with Spread Betting

Currently, there aren’t any Spread Betting companies who offer the cTrader platform. In addition, there are very few FCA regulated cTrader brokers. Those that are, do not currently offer Spread Bets. This is due to the circumstances of the industry. Spread Betting has been around long before cTrader and as mentioned already, Spread Betting is pretty much isolated to the United Kingdom. Leading providers from the UK like IG and CMC had already built their own trading platforms and there was very little need for another platform. 

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