Why do you not also do Spread Betting? It would be tax-free for those of us in the UK, which CFDs isn’t.
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I think probably because that is neither trading nor investing but just gambling. T212 makes money through the CFDs which fund the Invest and ISA accounts.
the % of spread betters who are successful is smaller than the % of CFD traders who are successful. when you want people to be able to succeed to keep coming back and use your service, a high lose rate is not very appealing. being tax-free isn’t so appealing if you can’t actually make any money.
ultimately though, it’s another specific service to provide which means more accounts and procedures to go through in order to bring it to market and whatever that means in regulations.
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But is that to do with the psychology of the account holder would you say? I’ve not done spread betting before but I recently started to compare it with CFDs and so far the only difference I can see for the UK trader is positive in terms of the tax relief. I can’t identify any risk increase inherently built in to spread bets vs CFD trading, it’s all gambling ain’t it?
I guess what I’m asking is if you had the option on T212 of opening a spread bet account vs the CFD, wouldn’t you take the spread bet one?
I don’t ask for arguments sake, I’m looking into the pros/cons of it all and I was intrigued by your comments here.
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CFDs are cheaper though. So if you’ve not got much money to get started, they’re your first option.
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i think when it comes to different forms of derivatives it’s hard to pin down any single aspect as to why more or less people succeed with it.
After all, if we knew exactly why, then a lot more people would know how to win their riches. I would have to think that psychology has about as much influence as the complexity of the system.
mostly it seems to be in liquidity and ease of access. so many more people are in CFDs that its simpler to get well-versed and educated in them and find a person who wants to trade. CFDs are a gamble, but approached by traders as financial transactions in a more responsible system than gambling outright.
when you look back at your years results, would you rather a small profit that is tax free, or a large profit with a portion paid in taxes? taxes aren’t a bad thing provided the rates are reasonable.
additionally, its not good to have too many UK specific accounts due to a limited pool of interest. the ISA is a great one because there are large numbers of people looking to prepare for the future and trying to build wealth, its possible we could see more versions of the ISA from other countries so T212 can really get a good coverage across Europe.
being able to offer something for French clients, German clients etc that perhaps only their country offers to residents could prove a great appeal to people joining T212 over PlatformX, BrokerY or BankZ. It’ll come down to regulations and whether or not other countries have something to offer.
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This is how I approach my CFD business also, I wouldn’t change that just because I decided to use Spread Bets instead but I do accept this may not be true for some others who might throw the form book out the window simply because the name of the account has the word ‘betting’ in.
Digging a little deeper overnight I learned that with SBs you have no choice but to pay the Bid/Ask, sort of like being forced to use market orders to open your CFD position and as spreads are typically wider you’ll need more favourable price movement in order to see a profit.
I agree about paying taxes, of course the net result is what matters at the end of the day, I think the hassle of having to self-assess is what puts me off more than the request to pay, we’ll see, I’m going to check it out risk-free and see for myself what it’s all about so if in a few months’ time someone else stumbles across this thread and has questions I may be able to chip in.
Cheers
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I am preparing my first tax return after starting to trade last year. Does Trading 212 just offer CFDs then, not spread-betting? I just need to make sure, as @FatMartinR mentioned above, spread-betting in the UK is tax free, but CFDs are not.
Many thanks,
Tom
CFD only, no spread betting.
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Hi, i have been making a lot of money on CFDs (i.e. taxable). Does spread work in the exact same way where I can hold for as long as i want (as long as i dont get margin called) and can pick any ticker I want, set trailing stop loss/ stop losses/ limit orders and price alerts?
Thanks @ridoskon - you’ll probably be aware that there are means to extract +ev from CFDs, and sports betting. Donglemouse was a well known poster on another forum that made 100k from such offers, but alas the process is so well known that bookies and spread betting companies have become a lot smarter. They are now more active on users taking advantage of account offers.
I was an early adopter, but sadly I used the earnings to supplement my income at the time, rather than seeing it as extra income that I should have invested.
Bonus bagging can still be done to an extent, but back to CFDs and spread betting, normally the margin is high to the point that unless you are extremely lucky or good at predicting movements (or +EV odds), then you will lose long term.
I honestly don’t get why HMRC don’t class CFD’s as gambling as its more riskier than normal stocks.
The only reason why they won’t class them as gambling as they know people can make significant amounts and they want tax from it.
I think that spread betting can definitely be appeal with the tax free angle in the UK, but it’s still a bit of a gamble in my eyes, especially if you’re just starting out.