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MT4 for Spread betting vs Forex

  • #1
  • First Post: Feb 14, 2018 6:58am Feb 14, 2018 6:58am
I have noticed the spreads are slightly different but using the functionality of MT4 platform is there any other difference between spread betting and Forex?
  • #2
  • Feb 14, 2018 9:54am Feb 14, 2018 9:54am
Quoting richhand
I have noticed the spreads are slightly different but using the functionality of MT4 platform is there any other difference between spread betting and Forex?

"Spread betting" is simply a title given to trading where the profits are free from taxation (you can only have a spreadbet account in the UK and if you are a UK resident).

You can more or less trade any financial instrument on spreadbet (provided the company offers it - IG Index offers hundreds of instruments including indices, rates, stocks, forex, commodities, options.)

Perhaps you mean to ask, "what the difference between using spreadbetting vs tradional forex trading houses"?

If so, then:

1:
Biggest difference as I have just said is that anything traded via a spreadbet account is free from tax. Trading forex on a non-spreadbet account will incur taxes (assuming you make profits greater than the tax free allowance)

2:
The spread really depends on the company. 'IG Index' has wide spreads on forex compared to say 'ActiveTrades' especially when trading FX crosses.

In my experience, IG are awful when it comes to overnight charges too. Their swap costs are significantly higher than most forex firms and even other spreadbet firms - but again, this is firm specific.

3:
Many Forex firms also offer ECN (where they get liquidity from banks) whereas with spreadbet, they usually act as the bookmaker.

4:
You also have a major difference in how much each point is worth when you trade, ie.

With spreadbets, the trade is usually quoted in, "£ per point". Ie You trade how much £ you wish to trade each point for ie. if you decided to trade at £6.00 a point and the price rises from 1.3909 to 1.3919 you will make (10*£6) = £60.

With regular FX brokers, you trade "lots" (see below link for how standard/mini/micro/nano lots work). Each lot is worth a specific amount.

https://www.babypips.com/learn/forex...rofit-and-loss


5:
Almost all Spreadbet firms are regulated, at least by the UK authorities where your funds are protected (up to £65k I believe).

With forex firms, not all are regulated and where they operate in countries with little or no consumer protection, you could get nothing back or it could take a while to recover any funds should the firm disappear or go in to bankruptcy.

-------------------------------

These are the differences I can remember of the top of my head. Hopefully others may be able to identify any others.

Hope this helps.
  • #3
  • Feb 17, 2018 5:38am Feb 17, 2018 5:38am
Thanks for that info. I was really referring to MT4 issues with spread betting however I picked up a couple of other relevant points too. I think it best to run a demo account for a while but I am realising it probably won't run as smooth as my forex account does.
  • #4
  • Feb 17, 2018 6:02am Feb 17, 2018 6:02am
Quoting richhand
Thanks for that info. I was really referring to MT4 issues with spread betting however I picked up a couple of other relevant points too. I think it best to run a demo account for a while but I am realising it probably won't run as smooth as my forex account does.
The info from Tesmy is comprehensive and spot on - answers all the questions I'm always asked, thanks!

As for the functionality of using mt4 on a spread-betting account, this is only a fairly recent development, as when the SB firms first launched the FX product, you could only use their own platforms, often online ones (so no terminal download on your computer).

This meant that you could not use any indicators other than the fairly basic, generic ones, which often didn't work as well, or weren't as customisable.

As such, one would more often then not, use a "normal" mt4 chart on another FX broker to find the trade set-ups but place the trades on the live SB broker.

Now by offering mt4 platforms specifically tailored towards SB, you can use all your specialist indicators on the platform you actually trade from.
  • #5
  • Feb 17, 2018 2:38pm Feb 17, 2018 2:38pm
Quoting lemercenaire
{quote} The info from Tesmy is comprehensive and spot on - answers all the questions I'm always asked, thanks! As for the functionality of using mt4 on a spread-betting account, this is only a fairly recent development, as when the SB firms first launched the FX product, you could only use their own platforms, often online ones (so no terminal download on your computer). This meant that you could not use any indicators other than the fairly basic, generic ones, which often didn't work as well, or weren't as customisable. As such, one would more...
"Range Bars" for example, or tick charts and Renko plus various indicators ( for those that use them) from MT4 that are not found on IG index and other spread bettors
every Saint has a past. Every Sinner has a Future
  • #6
  • Feb 17, 2018 5:46pm Feb 17, 2018 5:46pm
If spread betting is your only occupation and you’re successful at it (highly doubtful on both issues) then it isn’t tax free.

Quoting Tesmy
{quote} "Spread betting" is simply a title given to trading where the profits are free from taxation (you can only have a spreadbet account in the UK and if you are a UK resident). You can more or less trade any financial instrument on spreadbet (provided the company offers it - IG Index offers hundreds of instruments including indices, rates, stocks, forex, commodities, options.) Perhaps you mean to ask, "what the difference between using spreadbetting vs tradional forex trading houses"? If so, then: 1: Biggest difference as I have just said is...
"The meek shall inherit the earth.." Yeah right, good luck with that shit..
  • #7
  • Feb 17, 2018 6:17pm Feb 17, 2018 6:17pm
Quoting Spreadbetter
If spread betting is your only occupation and you’re successful at it (highly doubtful on both issues) then it isn’t tax free. {quote}
Yeah, I was going to mention that. If it's your only income, the tax man will not be happy letting you keep it all. Horse-racing pro-gamblers face the same problem.

If you're successful enough to warrant worrying about it, then you will be able to afford a good tax-accountant who'll minimise your exposure anyway.
  • #8
  • Feb 20, 2018 4:52am Feb 20, 2018 4:52am
Quoting lemercenaire
{quote} Yeah, I was going to mention that. If it's your only income, the tax man will not be happy letting you keep it all. Horse-racing pro-gamblers face the same problem. If you're successful enough to warrant worrying about it, then you will be able to afford a good tax-accountant who'll minimise your exposure anyway.

Morning all,

Spreadbet taxation is a nightmare - I believe the Taxman has tried to take a few people to court but to date, there has never been a reported case of them actually winning.

It's a legal minefield for everyone. It's not un-known for people to phone the same tax office and get two different answers, depending on whom they were talking to.

But fact is you can quite easily get around any spreadbet taxes by taking on a part-time job or even sending out a few cv's a month (to prove you are looking for work - done in the most un-professional of ways of course). If you really wanted, you could ask someone you know who runs a business, to state they pay you to carry out consultancy work (it benefits them as they can claim whatever they say they are paying you as an expense).

Disclaimer:
Nothing in this message denotes advice on how to avoid taxes - we all have a moral duty to pay said taxes so that the government can spend them on any activity it sees fit - even if it may (does) involve spending on any activity we may find morally reprehensible.

Any and all suggestions are merely for entertainment purposes only
  • #9
  • Feb 20, 2018 5:47am Feb 20, 2018 5:47am
Quoting Tesmy
{quote} Morning all, Spreadbet taxation is a nightmare - I believe the Taxman has tried to take a few people to court but to date, there has never been a reported case of them actually winning. It's a legal minefield for everyone. It's not un-known for people to phone the same tax office and get two different answers, depending on whom they were talking to. But fact is you can quite easily get around any spreadbet taxes by taking on a part-time job or even sending out a few cv's a month (to prove you are looking for work - done in the most un-professional...
Surely though, if your SB was earning a significant amount and considerably more than the part time job would then they would want to tax you anyway?
  • #10
  • Feb 20, 2018 7:12am Feb 20, 2018 7:12am
Quoting Tesmy
{quote} Morning all, Spreadbet taxation is a nightmare - I believe the Taxman has tried to take a few people to court but to date, there has never been a reported case of them actually winning. It's a legal minefield for everyone. It's not un-known for people to phone the same tax office and get two different answers, depending on whom they were talking to. But fact is you can quite easily get around any spreadbet taxes by taking on a part-time job or even sending out a few cv's a month (to prove you are looking for work - done in the most un-professional...
'' If you really wanted, you could ask someone you know who runs a business, to state they pay you to carry out consultancy work (it benefits them as they can claim whatever they say they are paying you as an expense'').

Otherwise known as ''The Sopranos'' option .

(For those unlucky enough never to have seen this masterpiece (why!?), this involves a construction company (or whatever) ''employing'' you to sit around on a chair shooting the breeze and enjoying the view, while taking a paycheck).

When I played semi-pro football in the US between pro gigs, I would be ''sponsored'' by companies connected to the team...same kind of thing.
  • #11
  • Feb 20, 2018 9:24am Feb 20, 2018 9:24am
Quoting turnip15
{quote} "Range Bars" for example, or tick charts and Renko plus various indicators ( for those that use them) from MT4 that are not found on IG index and other spread bettors
I believe there exists various MT4 plugins that allow for range bars or tick charts - some are free and some are commercial.

If you are with IG, you could always subscribe to the ProTrader platform, it offers all sorts of charting. However am not sure how they calculate their ticks - whether it's based on their own quotes or the underlying futures quote. If you do a certain number of trades per month, they don't charge you for it.

To trade indices, I personally have set-up an account with a "real" futures broker (AMP Futures) where something like Sierra Charts is offered free (as well as a host of other platforms). I do have to pay for the exchange access but I believe it does give you a far better understanding of futures trading (and trading generally). You can see how volume eats away at various price levels to move prices etc, something you never see if you don't have level 2. But I digress.

I have two spreadbet accounts, one with IG and one with Activtrades. Activtrades quotes the true ES mini futures (with a 2 tick spread - no daily rollover charges) whereas IG offers a daily S&P (their future quotes is about 8 ticks wide - they deliberately try and make you trade the daily as it incurs daily rollover costs which is a great money maker for them).
  • #12
  • Feb 20, 2018 9:27am Feb 20, 2018 9:27am
Quoting lemercenaire
{quote} '' Otherwise known as ''The Sopranos'' option

I thought this still happened in the construction industry in the US? Godfather edition
  • #13
  • Feb 20, 2018 9:36am Feb 20, 2018 9:36am
Quoting richhand
{quote} Surely though, if your SB was earning a significant amount and considerably more than the part time job would then they would want to tax you anyway?

Hi Richhand:

If they took you to court and won, imagine if you then started losing and never had a profitable year again. If they declared your spreadbetting taxable, then you would be able to carry any annual trading loses over to the next tax year, writing them off against any other income you may make thus the taxman would be losing out on revenues.

The tax man can't apply one set of rules when you are having a profitable year and a different set of rules during un-profitable years, they have to be consistent.

As such, the tax man does play the law of averages; It's easier for them to declare spreadbetting as non taxable as even they know, in the long-term, most spreadbetters lose.
  • #14
  • Feb 20, 2018 12:36pm Feb 20, 2018 12:36pm
Quoting Tesmy
{quote} Hi Richhand: If they took you to court and won, imagine if you then started losing and never had a profitable year again. If they declared your spreadbetting taxable, then you would be able to carry any annual trading loses over to the next tax year, writing them off against any other income you may make thus the taxman would be losing out on revenues. The tax man can't apply one set of rules when you are having a profitable year and a different set of rules during un-profitable years, they have to be consistent. As such, the tax man does...
Are you related to my accountant?
  • #15
  • Feb 21, 2018 6:37am Feb 21, 2018 6:37am
Quoting lemercenaire
{quote} Are you related to my accountant?
Depends, do you pay any tax? If so, probably not, then again, he could be the runt of the family
  • #16
  • Feb 21, 2018 8:52am Feb 21, 2018 8:52am
Quoting Tesmy
{quote} Depends, do you pay any tax? If so, probably not, then again, he could be the runt of the family
Aw, I love him to bits!
  • #17
  • Feb 26, 2018 3:26pm Feb 26, 2018 3:26pm
Trying a demo MT4 right now. The first issue I find is the small 2 hour long "daily" candle that occurs following Friday due to the 22.00 GMT end to the day which means piecing things together. Then the skewed daily and H4 candle sizes due to daily charts turning over 2 hours after NY close.
  • #18
  • Mar 1, 2018 3:46am Mar 1, 2018 3:46am
I can forget the above now, ETX Capital's MT4 platform with correct daily turnover runs like an FX MT4
  • #19
  • Mar 1, 2018 3:56am Mar 1, 2018 3:56am
Quoting Tesmy
{quote} Morning all, Spreadbet taxation is a nightmare - I believe the Taxman has tried to take a few people to court but to date, there has never been a reported case of them actually winning..............

I've been consistently advised that it is traders who want to be taxed, not the HMRC who want to tax traders, so they can claim for losses, which HMRC see as inevitable. But have you any references for actual court cases, or is it just through the trading grapevine?
  • #20
  • Mar 1, 2018 6:42am Mar 1, 2018 6:42am
There’s a reason why HMRC doesn’t bother pursuing solo spread betters, whose only employment is “self employment” as wretched gamblers. Can you work out why?


Quoting tomorton
{quote} I've been consistently advised that it is traders who want to be taxed, not the HMRC who want to tax traders, so they can claim for losses, which HMRC see as inevitable. But have you any references for actual court cases, or is it just through the trading grapevine?
"The meek shall inherit the earth.." Yeah right, good luck with that shit..
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