We offer spread betting and CFD trading across a range of powerful and innovative trading platforms which have been designed to maximise your trading potential.
The fundamentals of spread betting and CFD trading are in fact very similar but there are some key differences.
This section aims to identify those key differences and help you to decide which trading account to open with us.
At City Index, we seek to cater for all client needs and our ability to offer spread betting and CFD trading helps us to give you a greater range of markets and better trading flexibility.
Range of Markets
Over 12,000 including shares, indices, FX and commodities
The two key differences in the mechanics between spread bets and CFDs relate to leverage and trade sizes. Below you can find out more information about both of these two key differences.
The mechanics behind your trade size, or ‘quantity’, and how this correlates to your trade notional value differs across spread betting and CFDs. As the table above denotes, with spread bets your trade size is correlated to a stake size, whilst CFD trade sizes by the amount of CFDs.
Spread betting stakesLet’s say you wanted to go long, or ‘buy’, Company ABC shares, which are currently trading at a price of 550p. You decide to place a buy spread bet of £10 per point. This means that for each penny Company ABC shares rally above 550p, you net a £10 gain.
The notional value of the spread bet is £5,500 (£10 x 550p).
CFD trade sizesAlternatively, if you wanted to buy Company ABC shares through a CFD trade, which is still trading at 550p, you could go and buy 1000 CFDs. This means that your profits or losses (P&L) will increase for each penny Company ABC shares rally or fall. Your total P&L is calculated as the difference between the opening value of the contract to the closing value of the contract.
The notional value of the CFD trade is £5,500 (1000 CFDs x 550p).
Your leverage or initial margin calculations also differs across our key three products; spread betting, CFDs and forex.
Spread bettingThe amount of margin you are initially charged to place a spread bet will differ depending on whether you are spread betting on an equity market, or a non-equity market. For equity spread bets, your initial margin is a fixed percentage, i.e. 10% of the notional value of your trade. However, for non-equity spread bets, your initial margin is a margin factor multiplied by your stake size.
For example, if you were to place a buy spread bet of £5 per point on Company ABC's shares, which have an initial margin rate of 10%, and whose price is currently 550p, your initial margin requirement would be £275 (£5 x 550p x 10%). However, if you were to place a buy spread bet of £2 per point on the FTSE 100, with a margin factor of 60 x stake, and the current indicative price is 5900, your initial margin requirement would be £120 (£2 x 60).
CFD tradesThe amount of margin charged initially for CFD trades is a fixed percentage of the trades notional value.
For example, if you were to place a sell CFD trade of 1,000 on Company ABC’s shares price, with it currently trading at 549p and has an initial margin rate of 10%, you would be charged an initial margin of £549 (1,000 x 549 x 10%).
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*Spread betting and CFD trading are exempt from UK stamp duty. Spread betting is also exempt from UK Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.
†1 point spreads available on the UK 100, Wall Street, Germany 30, France 40 and Australia 200 during market hours on daily funded trades & daily future spread bets and CFDs (excluding futures).
**Fixed spreads are available on major FX pairs during London trading hours between 8.00am GMT and 6.30pm GMT.
City Index is a trading name of GAIN Capital UK Limited. Head and Registered Office: Park House, 16 Finsbury Circus, London, EC2M 7EB. GAIN Capital UK Ltd is a company registered in England and Wales, number: 1761813. Authorised and Regulated by the Financial Conduct Authority. FCA Register Number: 113942. VAT number: 524837435.
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