In this view, the FSA has set several requirements in order for a person to be eligible as a trader or investor in the United Kingdom. These regulations and requirements are pursuant to the enabling, which is the Financial Services and Markets Act of 2000. Specifically, under Section 19 of the said law, it is the mandate of the FSA to authorize or exempt any person who will engage into any of the regulated financial activities in the country. If a person or entity will not comply with this provision of the said low, they are violating it and this will be considered a criminal offense that can be punishable by imprisonment or fine or both.

So, what are the things that need to be understood in order to be considered a legitimate trader or investor in the country for investment activities like futures and spread betting, stocks or share dealing as well as contract for difference of CFD trading? In this view, there are only three  aspects that one needs to keenly look into. These are the qualifications, processes and scope.

On the one hand, the qualification refer to the sets of requirement that a person is obliged to submit to the authorities in order to process their registration. It is imperative that one is always updated to the requirements of the government for registration because it is being updated regularly.

On the other hand, the processes are simply what it seems. It refers to the procedures that one needs to undertake for the registration like going to specific offices and submitting the requirements that will be required by the FSA. There are some instances wherein one needs to prove possession of a capital or asset before being allowed to engage into any forms of investments.

Lastly, the scope refers to the investments activities that one will be allowed to engage into. Some of these include the CFD trading, spread betting, futures options, share dealing and many more.

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.

I was looking for a CFD calculator because sometime it is a bit confusing to calculate how much shares to buy or to sell. I opened a short position today on HSBC at 552 and I wasn’t sure how much share I should put. This can have a huge impact on your profit / loss balance…

I have a friend who once thought he is opening a position of £5 per point while in fact he opened a position of £500 per point…!

So I fount this free CFD Guide. Enjoy!