Futures trading- My Thoughts

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Having traded through direct access for the last few years I can thoroughly recommend futures trading. Whilst, like most, I started trading via spreadbetting I am not sure I would every go back to it now. The benefits of futures trading seriously outweigh those of spread betting for my situation.

Spreadbetting is in comparison expensive. Even with a company that provides 1-2 point spreads, per £10 a point trade, say on the FTSE 100 futures or index equivalent, you will be spending up to £20 on the spread (per round trip) whilst with direct access that cost will be down to less than £5. The other common issue with spreadbetting is getting decent fills. With direct access contract fills are instantaneous.

The main attraction of spreadbetting over futures trading is that currently in the UK it is deemed as tax free. However, there are some notes on HMRC about this which imply that it depends on what kind of trading you do and such like which suggest that it depends on the individual circumstances whether it is tax free. Trying to get a firm ruling from the HMRC on this has not been possible so far. But for most people it will be tax free.

However, using direct access futures trading instead does not mean you are wasting away your profits to the tax man. Whether you choose to trade as a small business or as an individual you will probably not start to pay any tax until way past the £10k profit mark. And even more if you start to discount costs. If you work out how much you would have spend in “spread” via spreadbetting to earn that much you will soon see direct access futures trading may be the path for you.

But obviously it depends on your circumstance to which suits you. The problem with DA trading is that you can only trade in whole contract sizes which obviously require a bigger deposit. Spreadbetting you can start from as little as a penny per point which makes it great for when you are just starting out.

I should add one thing. If you are not profitable trading via spreadbetting then changing to direct access market trading will not make you suddenly a winner. It doesn’t work like that. It just makes the whole trading process more efficient in my opinion.

I will be posting up some links to futures brokers and spreadbet providers in the near future which I hope will be of some use to the readers. Obviously some of the trading systems out there are futures trading systems so you may need to investigate various brokers if you are to go down that route.


If you still like the idea of spreadbetting why not try and .

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