Spreadbetting – The Pros and Cons

Filed under: Learn Forex Trading |

I have recently joined a spreadbetting company to trade the forex markets, along with my regular forex broker (Go Markets). The company is called GKFX, and I joined them to take advantage of their 300 GBP cashback offer, which provides a refund on any losses up to 300 GBP in your first month of trading.

 

I have used spreadbetting platforms before and traded live on them, but I only ever traded stocks and did not trade the FX markets. Therefore, spreadbetting the forex markets is a completely new experience for me.

 

The first and most obvious difference in trading is that rather than trading with the complexities of lots and having to work out how many lots to trade, you simply trade using a pounds per point system. This is actually much easier to get your head around and it is this much easier to work out your risk levels. For example, if you have a stop loss of 150 pips, and you want a risk level of 100 GBP, then you simple divide 100 by 150, and you get 0.66 per point. You can also trade using the MT4 platform with GKFX, so it will not feel a whole lot different to trading with a regular broker.

 

Another great thing about spreadbetting is that, as it is technically gambling, then you do not have to pay any tax on your profits. If you are trading with large sums of money, then this loophole could be very beneficial for you in the long run.

 

Unfortunately, there are some cons. The charts tend to be more volatile with spread betting companies, and there is the sense that they are gunning for your stop losses so that you make more trades. At the end of the day, a reliable broker is more important than anything else, and at the moment, GKFX and other spreadbetting companies are very much unproven with regards to reliability.

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