Comparing spread betting against classic Forex it has some pros like the Tax Free for your profits and the bigger range of markets offered, but also some cons like some brokers being under bets & gaming supervision rather than financial investments regulation. To make things easier we listed the shared characteristics among them and who has the EDGE in each of them:

	FOREX	SPREAD BETTING
Leverage	Even	Even
Slippage/Requotes
Range of Markets
Trading platforms
Capital Gain Tax
Stops losses guaranteed	Even	Even
Transparency and Reputation
Regulation
Risk Management	Even	Even
Acceptance among investors and background

As we can see, both of them are tied according to our perception and the decision is all up to each investor, but let’s breakdown every characteristic:

Leverage:
Classic Forex offers leverage from 1:1 up to 1:1000, with the most popular being at 1:200 and 1:400. Spread betting offers the same leverages being the most common at 1:100 and 1:200

Slippage/requotes:
Classic Forex is supposedly a more trustable market and these problems shouldn’t happen, but the truth is that those are the most common trick for many brokers to scam clients. Spread betting rarely has these problems since you are trading on the movement and if the price moves (requotes) the whole transaction moves as well, depending on the strategy and specific broker conditions a slippage or requite might affect you, but those are particular issues, said that, spread betting has the edge here.

Range of Markets:
In Classic Forex, you have as much like 130 currency pairs, 5 Indices and 10 commodities with the biggest brokers; in Spread Betting you obtain Indices, Equities, Interest, Commodities, Bonds and Currencies, depending on each trader this could be an advantage or disadvantage but we believe that with more choices the risk mitigation management could be improved and/or helped having the Spread Betting the edge over Classic Forex.

Trading Platforms:
Classic Forex can offer at least 8 well-known platforms plus another 25-30 not that popular, meanwhile Spread Betting is always web-based and some brokers offer a desktop platform with their name but with the same software as the competence, which means that platforms are almost the same despite the broker, maybe is because of maturity of markets but here Classic Forex has a big advantage over Spread Betting.

Capital Gain Tax:
Classic Forex pays taxes, Spread Betting don’t, enough said.

Stop Losses Guaranteed:
Both kinds of trading have presented problems when the market is going against the client, it is supposed that being a gamble, Spread Betting stops at the desired priced but the truth is that the broker is always your counterpart so bigger your loses, bigger their profits, Classic Forex has had this problem forever; this is a tie in our grading.

Transparency and Reputation:
Most Classic Forex brokers are regulated by many entities and some of them are listed on stock exchange markets, while Spread Betting brokers just supervised under the gaming license. Classic Forex market is the bigger financial market, also most popular, the edge goes to Classic Forex, experience over the youngsters.

Regulation:
What can you say of a so-called financial broker regulated by gambling and game authorities in an off-shore? Well, this happens with some Spread Betting brokers, of course Classic Forex has a slight advantage here, but don’t forget that even in Classic Forex you’re not protected from scams.

Risk Management:
Spread Betting lets you know how much you can lose, Classic Forex pretends to do it, and this is because of the aforementioned slippage and requotes problems, anyway, both of them are risky and are not recommend for everybody.

Acceptance among investors and background:
The history wins it here, Classic Forex has been there longer, even in raw forms it has existed since Romans and other ancient cultures, Spread Betting is derived from pure betting and gambling and fixed it to adjust to financial markets. Among serious and big investors or educated traders, Spread Betting is like bet on sports and not real trading, that means that is not taken seriously, is not well accepted and of course it does not have the same time operating.

Conclusion

We see these new kind of instruments as good options to diversify your portfolio, let’s remember that diversification is a basic concept in finance, and if done in the right way, it mitigates risks as well as it increases profits; on the other hand, some people see Spread Betting as an experiment, this could be thanks to their short time operating or thanks to the prone-to-loses profile it has, but, going back in human history, experimenting has always been good, in fact, this is how our way of living has evolved from a very primitive into a comfortable one.

Just to finish, we recommend using Spread Betting with the same caution we use any other derivative, don’t be overly excited thinking that we can be rich the very next day, as well as knowing that this can be a nice choice to hedge other positions with other instruments in order to cover bigger risks.

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