Saturday, 1 July 2017

Contarct For Difference and Spread Betting Survey on Their Advantages, Disadvantages, Risks and Usage Frequency

I was reading a very comprehensive survey appeared on about the disadvantages and advantages of using contract for difference or spread betting as a means of trading the financial and stock markets - There were some very interesting answers and statistics given by traders, financial managers etc, which I like to share with you on The CFD Traders Blog -

I've picked and illustrated the most pertinent and interesting pieces for you since it was a fairly large survey which may have bored some of you as I know some traders are not the most patient individuals around - You can say that again :)

So here we go with the questions and answers and I hope you will find it educational:

Percentage of traders using Contract For Difference and Spread Betting as day trading/hedging instruments:

As shown in the above diagram, 46% of traders use CFD's, 37% trade via spread betting and the remaining traders use both CFD's and SB together.

Percentage of CFD/SB traders using other instruments also:

As can be seen in the above chart, 79% of cfd/sb traders also trade in equities, 72% EFTs, 31% Investment Trusts, 28% Bonds, 21% Future markets and 7% traded in Options in addition to using CFD's/SB's.

Percentage of financial markets, CFD & Spread Betting traders are most likely to trade:

  • The FTSE 100 Index (footsie) appears to be the most popular market that CFD/SB traders use for trading at 66%.
  • Single stocks and equities were used by 62% of traders.
  • 35% traded the US market indices such as the Dow Jones Industrial and the S&P500.
  • 28% traded currencies (FX)
  • Commodity trades were at 24%
  • ex-UK European indices like CAC & the German Index DAX were also traded by 24% of traders.
  • Asian markets had 21% share of trading.
  • Other markets formed 10% of the trades.

Advantages and Benefits of Contract For Difference and Spread Betting trading:

  • 69% of traders liked the high leverage CFD could offer
  • Also, 69% mentioned the ability of placing short-sell trades as well as going long on trade positions as a flexible advantage of trading CFD's and Spread bets.
  • Spread Betting being tax free was another advantage mentioned by 54% of traders.
  • Being able to use stop-losses was another factor mentioned by 15% of CFD traders.
  • Other factors formed 8% of the votes.

Which CFD & Spread Betting Brokers are used most:

  • IG (IG Index previously) was the most popular CFD Broker at 39%
  • CMC Market & City Idex got 13% of the traders' choice.
  • 4% of CFD traders used Capital Spreads as their favourite CFD/SB provider.
  • 13% said they used more than one CFD provider.
  • 22% of traders used other than above mentioned brokers (and there are vast number of other CFD providers as some know)

CFD Traders - Number of years of using Leverage Trading:

  • 52% said they've been trading using leverage between 1 to 5 years.
  • 22% were experienced traders as they traded on leverage between 5 to 10 years.
  • The very much more experienced professional traders who were trading longer than 10 years formed 17% of the answers.
  • Traders who traded on leverage for less than 1 year were in the 9% category.

Profits and Losses Made by Traders during one year:

  • The majority of CFD traders which was 27% reported small profits during last 12 months.
  • 23% of either lucky or more professional traders reported significant gains.
  • Also, traders who showed small losses or gains were 23% each.
  • 4% of traders who were probably more honest to themselves confessed that they had significant losses.

Biggest Trading Risks Reported by CFD & Spread Betting Traders:

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