Leverage has a bad name at the moment, and deservedly.  Warren Buffet calls it “the only way a smart person can go broke” and is not too kind about the idea of people who aren’t smart using it, either.  Leverage was also the way in which many sound businesses became suddenly poor as the downturn turned sharply against them.
Leverage is like a sharp cooking knife – incredibly effective when you are doing what you want to do but rather dangerous when you are being …

As contracts for difference are seen as a risky investment choice they are seen by many investors as something to be avoided if at all possible.  This is a shame, as they can be very useful for most retail investors.
There are two main roles for a contract for difference as part of a balanced portfolio that encompasses shares, commodities and investment funds.  The first is as a hedge and the second is as a way of playing a movement in the markets.
A hedge means …

Contracts for difference are a futures contract and so they are taxed in quite a different way from many other investments.  Despite having a similar terminology and providers that spread betting has they are treated in quite a different way.
In the UK the government will not tax gains or losses made with gambling as gamblers tend to lose money on the whole and this would overall lower the tax take.  (Cars don’t count for capital gains for a similar reason in that they …

One of the big differences between financial spread betting and contracts for difference is that contracts for difference have margin calls.  For many investors this will be the first time they have come across them, so it’s good to know what they are.
First let’s look at another difference between Contracts for Difference and spread bets, and that’s to do with timing.  Spread bets run out.  If your bet is still out of the money when your deadline has run out then you simply …

Contracts for difference were popular in the hedge fund community throughout the 1990s, but they were unknown to retail investors until the late 1990s.  Their growth among retail investors was greatly helped by the growth of online trading.  Contracts for Difference, due to the fact that they are a bet on share prices need constantly updated prices and the growth of real time platforms was the start of this.
The sort of investor who wants real time information is also the sort of investor …