This is really tough call and it may change from trade to trade. For example lets say you want to buy Tesco and the bid /ask is 360 / 360.2. If you using spread betting the spread betting company will put the spread a bit wider, lets say 359 / 361.

For this example lets say you want to buy 2000 shares using CFD or 19.95 per point using spread betting. And your exit point is 380 with CFD or 379 using the spread. You will hold the position for 20 days.

So for CFD you will pay this:

commission £20

Daily intrest (Libor + 2.5% at the moment the Libor is 1.73%): 7200*0.011%*20 = 15.84

your profit is £399 – £35.84 commision = £363.5

Now with spread betting things are much simpler to calculate. Your profit is 19.95*18= £359.1

So in this case it is a bit cheaper using CFD. But as I said it may change from trade to trade. But what I like about the CFD is that the cost is in your face and you think about them all the time and take them into account. While on spread betting it is hidden in the spread and it is so easy not to calculate them. I have a friend that still don’t get it that spread betting cost him money every time he opens a trade.

Another thing that I like about CFD is that it is transparent. What you see is what you get. The price of the market is the price that you buy or sell. While on spread betting it can be manipulated a bit by the companies and sometime it is so obviouse that they push the spread a bit more so it breaks a support or resistance level.