“To Spread Bet, or Not to Spread Bet?” – That is the Question

Filed under: Learn Forex Trading |

A lot of beginners to trading the forex markets are attracted to the ease and simplicity of opening a spread betting account. One of the major draw cards for doing this is that any money made on a spread betting account is tax-free. This is because it is officially classed as gambling rather than trading – and all betting profits in the UK are tax-free.

 

However, when you are starting out trading forex, the last thing you should be doing is worrying about paying taxes. After all, you can make a little over 10,000 GBP in capital gains before you have to pay any taxes at all. I would be very surprised if any beginner traders made anything like that amount of profit in their first year trading.

 

Therefore, rather than choosing a broker and a trading platform based upon whether or not you will be liable to pay tax, you should be looking at other, much more pertinent factors. Perhaps the most important of these factors is the reliably of the charts. Spread betting platforms offer much more volatile and unreliable charts, so it is much more difficult to use price action trading strategies. The spreads also tend to be quite large, which eats into your profits. The only good thing really is the ease of trading, as you don’t have to work out ‘lots’ and can trade on a ‘per point’ basis.

 

I would recommend opening a forex broker account using an MT4 platform.  Again, some are good, and some are not so good, so you will have to do your homework. I would also go for a broker that uses New York Close candles. This is much better for trading using price action signals. So should you use a spread betting platform for trading forex? Probably not – but ultimately, it is your call.

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