Comparison of the Trading Methodologies

SPREAD BETTING

CFDs

Differences

Trade same instrument in multiple currencies

Trades are denominated in the instrument’s currency

Exempt from capital gains tax*

Liable for capital gains tax*

No commissions on shares - this is built into the spread

Shares are charged a commission, but have lower spreads

All spread bets have a fixed expiry

Losses can be offset against profits for tax* purposes

 

Only CFD futures have a fixed expiry

Similarities
Ability to go long and short Ability to go long and short
Leverage trading Leverage trading
No stamp duty No stamp duty
Prices derived from underlying markets Prices derived from underlying markets
Same instrument range Same instrument range
*Tax treatment depends on individual circumstances and is subject to change. Tax laws may vary outside the UK​. Your profits and losses are amplified as they are based on the full value of your trade.

TRADING WITH ADSS: IMPORTANT THINGS TO KNOW

Understanding risk and rewards

You can trade Contracts for Difference or spread bets with ADSS. These are leveraged products that let you trade at full market value, but you only have to hold a smaller initial deposit on your trading account - a small percentage of the overall trade.

That means you can potentially make a larger profit – but you could also lose all of your deposit if the trade moves in the wrong direction.

 
 
 

Market volatility and your account

Many things can impact your trades and the balance of your account. For example, breaking global political news and company earnings reports can have an effect, and if you can trade in markets that are open 24 hours a day and you might find volatility occurs at any time.

So it’s important you ensure your account balance has enough funds to cover all your margin rates to avoid an account.

What happens if your account is closed out?

Your account level with ADSS is set at 50% - that’s the minimum amount of margin you need to keep your positions open. If your account value drops below this, your largest losing will be closed first, and then the second largest losing next, and so on until you have sufficient equity to fund your remaining positions or all of your positions have been closed out.

Here’s an example of how it could happen: if you held four positions each with £250 of margin, a total margin of £1,000 is needed. If the markets move in the wrong direction and your account value drops below that 50% level (in this example the drop would be to £500), you won’t have sufficient margin and your positions could be closed out, with the largest losing the first to be closed.