Spread Betting with FXCM

Financial spread betting is the tax-free way for UK and Ireland residents to take advantage of rising and falling markets without having to buy an asset from the underlying market. Spread bets are also commission-free and can be traded with leverage.

Why Spread Bet?

Tax Free

No capital gains tax and no stamp duty when spread betting.1

Access to leverage

Leverage limits on the opening of a position vary between 30:1 and 2:1, depending on the tradeable instruments. 2

Multi-asset Platform

Spread bet forex, indices and commodities on FXCM's award-winning trading platform.

Spread Bet rising or falling markets

Spread betting is flexible, allowing you to take advantage of both rising and falling markets.

When you spread bet with FXCM, you enjoy:

  • Multiple platforms and mobile apps
  • Smaller bet sizes (from 7p a point)
  • Award-winning customer support

With spread betting, spreads include a mark-up, but there are no commissions to pay—all trading costs are built into the spread. CFD-trading accounts are charged commissions.

This, in addition to the tax advantage, is why many UK and Ireland residents choose to spread bet instead of trading CFDs.

Still undecided? Find out more about CFD trading.

Spread Betting Spread Costs

Pair Spread Pair Spread Pair Spread
AUD/CAD 2.1 AUD/CHF 3.2 AUD/JPY 1.9
AUD/NZD 3.4 AUD/USD 0.7 CAD/CHF 3.3
CAD/JPY 2.0 CHF/JPY 2.1 EUR/AUD 2.3
EUR/CAD 2.4 EUR/CHF 1.2 EUR/GBP 1.2
EUR/JPY 1.7 EUR/NOK 34.1 EUR/NZD 3.8
EUR/SEK 32.8 EUR/TRY 25.2 EUR/USD 0.6
GBP/AUD 4.0 GBP/CAD 4.1 GBP/CHF 2.6
GBP/JPY 2.4 GBP/NZD 5.8 GBP/USD 1.2
NZD/CAD 4.6 NZD/CHF 4.4 NZD/JPY 2.0
NZD/USD 0.9 TRY/JPY 4.5 USD/CAD 0.9
USD/CHF 1.0 USD/CNH 8.0 USD/JPY 0.7
USD/MXN 37.1 USD/NOK 30.9 USD/SEK 30.8
USD/TRY 22.5 USD/ZAR 58.1 ZAR/JPY 4.0

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Concept Of Spread Betting

Spread betting is a form of derivatives trade centered on speculation pertaining to the future pricing volatilities facing a specific asset class. Simply put, it is a financial tool that enables traders and investors to capitalise upon a forthcoming move in a security's price without having to own the security.

The concept of a "spread" has a great deal of relevance to a spread bet's function. Essentially, a spread is the difference between the bid and ask price of an asset, or the prices in which a trader may buy or sell a security on the open market.

Current supply and demand forces determine the magnitude of the bid/ask spread, influenced by liquidity providers, independent retail traders and institutional investors. As buyers and sellers interact within the marketplace, the process of price discovery ensues. This interaction influences the spread, evolving price action to a state of equilibrium.

When spreadbetting, the direction of ever-changing price action is the ultimate focus of the trade.

Why Spread Bet?

Spread Bet Chart

Spread betting affords traders and investors several unique advantages over other methods of engaging the capital markets. As a provider of forex and CFD market access, FXCM offers its clientele the multifold benefits of spread betting:

Asset Class Diversity:

Currencies, equities and commodities are all available for spread betting, providing a wealth of trading alternatives to individuals interested in pursuing opportunity within the marketplace.

Access To Leverage:

Leverage limits on the opening of a position vary between 30:1 and 2:1, depending on the tradeable instruments. This enables you to enter trades with lower initial capital requirements than unleveraged alternatives.

Engage Rising Or Falling Markets:

Traders and investors are able to profit from periodic spikes or selloffs in the price action facing a spread betting product.

Tax Advantages:

For residents of the U.K. and Ireland, proceeds realised from spread betting are tax free.

Low Fees:

For residents of the U.K. and Ireland, proceeds realised from spread betting are tax free.

Spread Betting In Action

Assume that a new currency trader holds conviction that the EUR/USD is going to rise from a current level of 1.1200. In order to benefit from the perceived opportunity, the trader contacts a spread betting firm and is quoted a spread of 1.1200/1.1203. The transaction is then executed accordingly:

  • A long position is opened at 1.1203
  • Leverage is implemented at £1 per pip
  • The EUR/USD rallies to 1.1210
  • The proposition is exercised at 1.1210
  • Profits are calculated and realised, 7 pips * £1 per pip = approximately £7

Of course, in the event that the EUR/USD fell 7 pips from entry, then a loss of £7 is sustained. In much the same fashion as many other modes of trade, successful spread betting is the product of sound strategy, proper money management and consistency within the marketplace.

For those interested in spread betting, FXCM provides market access via multiple platforms and mobile apps along with award-winning customer support. In addition, a robust suite of educational materials and a free £50,000 practice account are available to individuals looking to take their trading to the next level.