Spread betting, CFDs, spot or futures: what do you actually trade?

FTC Community TeamStaff115 views

"Trading forex" covers several different products, and which ones you can use depends on where you live:

  • Spread betting is offered to residents of the UK and Ireland.
  • CFDs are available to retail traders in many places, including the EU, the UK and Australia, but not to retail clients in the United States.
  • Retail spot forex is how US traders access the market, through firms registered with the CFTC and the NFA.
  • Currency futures trade on exchanges such as CME, with fixed contract sizes and expiry dates.
Spread betting, CFDs, spot or futures: what do you actually trade? — leverage and margin diagram
Leverage: a small margin controlling a larger position

Leverage limits, protections and tax treatment differ between them. Tell us which product you use, where (a region is enough) and why you chose it. Please don't give others tax advice; describe your own understanding and suggest people check with a qualified adviser.

Spread betting, CFDs, spot or futures: what do you actually trade? — bid-ask spread diagram
The bid-ask spread on a currency pair

Background: leverage limits by region and trading forex from the United States.

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  1. FTC Community Team1 mo ago

    A side-by-side summary that might help newer readers follow the replies. Tax treatment is left out deliberately, since it depends on your personal situation.

    • Spread betting (UK and Ireland): you stake an amount per point. Retail leverage limits and negative balance protection apply, as with CFDs.
    • CFDs (EU, UK, Australia and many other regions; not US retail): you trade a contract for difference in lots. Retail leverage on major pairs is capped at 30:1 in the UK and EU.
    • Retail spot forex (US): through firms registered with the CFTC and NFA. Leverage on major pairs is capped at 50:1, positions follow FIFO rules, and hedging in the same account isn't permitted.
    • Currency futures: exchange-traded contracts with fixed sizes and expiry dates, and prices that are visible to all participants.

    For details by region, see leverage limits for retail traders and trading forex from the United States. Members, what made you choose your product?

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