I'm curious to know if there may be a significant number of members trading successfully (e.g. for a living) using CFDs in place of the conventional purchase of stocks via brokers like IB.
Given that I'm sure that many successfully swing trade using CFDs, do any members use CFDs for day trading US stocks even though the costs are much heavier? I can't help feeling for example that to take a 1000 share position on a Nasdaq stock with a CFD position with a broker offering a guaranteed stop loss may be worth the additional cost for the sake of peace of mind.
For example: let's take this scenario. I purchase 1000 shares of stock ABC at a cost of $25 = a position of $25,000. The broker charges me 0.15% commission ($37.50) and I pay a further 0.3% ($75) for a guaranteed stop. I am required to make available 5% margin for the trade ($1,250). With all this considered, I enter the position for a broker's cost of £112.50. During the day, or over the next couple of days, the stock rises to $27. You close your position, the commission to close being $40.50. Result = $2000 - $153 total costs = $1,847 in the bank.
Now then, the direct access traders among us will flinch at the comparatively very heavy costs of trading this way but I wonder how many out there would view those costs as heavy insurance premiums to protect against possible - however remote - wipe-out. Such a scenario could happen. I could envisage holding overnight positions with a Nasdaq stock with this insurance in place but would never, under any circumstances, hold an overnight position (particularly a Nasdqaq stock) without it.
Anyone have any views?
Sean
Given that I'm sure that many successfully swing trade using CFDs, do any members use CFDs for day trading US stocks even though the costs are much heavier? I can't help feeling for example that to take a 1000 share position on a Nasdaq stock with a CFD position with a broker offering a guaranteed stop loss may be worth the additional cost for the sake of peace of mind.
For example: let's take this scenario. I purchase 1000 shares of stock ABC at a cost of $25 = a position of $25,000. The broker charges me 0.15% commission ($37.50) and I pay a further 0.3% ($75) for a guaranteed stop. I am required to make available 5% margin for the trade ($1,250). With all this considered, I enter the position for a broker's cost of £112.50. During the day, or over the next couple of days, the stock rises to $27. You close your position, the commission to close being $40.50. Result = $2000 - $153 total costs = $1,847 in the bank.
Now then, the direct access traders among us will flinch at the comparatively very heavy costs of trading this way but I wonder how many out there would view those costs as heavy insurance premiums to protect against possible - however remote - wipe-out. Such a scenario could happen. I could envisage holding overnight positions with a Nasdaq stock with this insurance in place but would never, under any circumstances, hold an overnight position (particularly a Nasdqaq stock) without it.
Anyone have any views?
Sean
