Are CFDs better than spread bets?

According to a recent survey, 62% of contract for difference (CFD) traders claim gains in the last twelve month, compared to just 50% of spread betters. So should you switch to CFDs?

Sooner or later most spread betters will come across a similar product the contract for difference, or CFD and wonder whether they'd be better off using it. After all according to Investment Trends, quoted in City AM "62% of CFD traders claim gains in the last twelve months". For spread betting the equivalent figure is just 50%. So should you switch to CFDs?

At first glance there's little difference. Like a spread bet a CFD lets you go long or short (bet on rising and falling prices). It's also margined so a small deposit gets you a lot of exposure to an underlying asset. However a closer look reveals some differences too.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.