CFD: why do amateurs shun it?

pb

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This is from a person who does very well in stock purchases but has failed miserably in spread betting:

It's well known that beginners flock around SB firms. It's also well known that professionals in the City don't spread bet, but they do trade CFDs, quite a lot. I saw somewhere that 30% of all shares traded are actually through CFDs. Most SB traders lose, because in SB, you are not only fighting against margin, but also the SB quotes, which are different from the underlying market. In contrast, you just have to beat the margin in CFD, you can trade touch prices. Admittedly, I haven't got a figure of what % of CFD traders lose.

In T2W, as of now, there are 5441 posts under SB, compared with 350 in the CFD section.

I was always told to do what the professionals do. The professionals trade CFDs.

Good bye spread betting.
 
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Got to agree with you. i never heard of anybody claiming they made money from SB. The spread is huge, and the quote does not really reflect the underlying market, but just the position of the broker.

its just a learning tool where u can pick up the buzz words.
 
There are people making a living off SB, I know a few on T2W. But that's a very, very tiny miniroty, and I bet these guys are top notch in their area.
 
zellers_077 said:
The spread is huge, and the quote does not really reflect the underlying market, but just the position of the broker.

.


Not wanting to get drawn into another of these debates but this is simply not true.

The quotes do refelct the underlying market, plus the SB firms spread and an interest charge. It is a simple formula to derive the SB price from the underlying market. I frequently trade this way and the SB firms have stuck to this formula in every case.

If you want a punt on sectors then these do reflect the brokers opinion. For stocks and currencies, they don't.

UTB
 
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I traded cfd's with CMC before they released their spreadbet platform. They currently offer both products, traded on identical platforms, with near identical spreads. In both instances they are acting as the middle man (bucket shop), and you are trading against them.

I think most "professionals" (do you mean institutions, hedge-funds?) are more likely to be trading futures contracts using direct access. This might well be the way for you to go (especially since you are concerned to keep spreads small), but if you have to choose between the former 2 choices then the most useful difference between them is that spread-bets are free (allegedly) of uk tax, and should keep your tax return looking a lot simpler!

pete
 
I trade CFDs for shares and spreadbet indices and find that works very well for me. I trade over long time for indices but much shorter for shares. I don't mind the spread on the indices because of that but wouldn't spreadbet shares unless I want to go long for several months.
 
I trade CFD's and have no trouble trading in a swing and position style. I'm always looking out for fellow CFD traders who share my time frame of trading to discuss the current market. I've always seen CFD brokers as a bucket style operation, but having returned 30% on my cash to date, just show you that it is possible. I'm no genius but i just stick to my rules. If you guys wanna start a lively discussion, i'll be willing to post some insights. Just check some of my previous posts to check my track record.
 
Hi folks,
Which CFD broker do you guys use - and why ;-) ?
I mean.. did you look at other brokers before selecting yours.. so what "better" points did you see ?
Cheers,
karmit
 
I used Hargreaves and Landsdown but the commission per trade was high and the platform basic, then moved to Etrade which is 9.95 per trade but i wanted tighter spreads , so i ended up with CMC Deal4 Free and im happy with this one , so i'll stick with no commission and tighter spreads!
 
I wouldn't use D4F at all ...
Have heard so many negative comments from friends of mine with very bad experiences with them and also I tried them for a while.. was okay at first, then ouch, I found the same thing too.
As for commision free.. if you look it it further, you will find other hidden costs... e.g. try to put a reasonable size trade on.. ooops oh, dear, not the same price, try to get out? oops oh dear ....

Will stick to GNI and other proper brokers!
 
I had a question regarding D4F CFD's trading.. If we go long/short CFD - overnight - on say the DOW ... is
it correct that the next morning.. the CFD is reset to the opening price? and the profit/loss for the past day
is "realised"?
I think this is unique to D4F? what do you say?
 
What are the commission/ other charges for GNI CFD's ? can't seem to find any on their website...
 
Well each to is own! suits my trading style and position at the moment. But if i do encounter any problems then i have a back up broker. I haven't found any problems to date, but obviously our position size and style must be different.
 
What are the commission/ other charges for GNI CFD's ? can't seem to find any on their website...
Depends on how frequently you trade, give them a ring and they can give you the details, excellent support.. the complete opposite to steal4lots
 
Well each to is own! suits my trading style and position at the moment. But if i do encounter any problems then i have a back up broker. I haven't found any problems to date, but obviously our position size and style must be different.
I was trialling d4f and had a position with GNI and d4f on the same share at the same time... the position with GNI was several multiples of the other... guess which was the best..... and no comparison by a long, long, long way.
I have closed my account with d4f
 
Hi Racer,
Is the CFD position "rolled over" overnight ? I mean is any profit/loss "realised" overnight?
Thanks,
karmit
 
can you explain 'several multiplies of the other' to those not on your wave length
 
zellers_077 said:
i never heard of anybody claiming they made money from SB.
Well, you live and learn. There are quite a few of us here making our living that way.

zellers_077 said:
The spread is huge
One of the many reasons I use SB as my trading method is that (contrary to some people's belief, evidently!) the spread is actually _smaller_ on the instrument I trade most than it is with my direct access accounts. And the regulation and safety factors are certainly a lot better as well. Not to mention that profits from direct access are taxable (CGT) and those from SB are not.

zellers_077 said:
the quote does not really reflect the underlying market
Sorry, but this is just bo**ocks. I really can't be bothered ...
 
'I really can't be be bothered'

loving it Roberto. feel the same sometimes.mighte have to switch to SB due to CGT on CFD.
 
karmit said:
Which CFD broker do you guys use - and why ;-) ?

I use IG Markets. Commission is variable - from 0.2% for regular traders over $AUS12,500 to 0.4% for smaller trades. There is a "Limited Risk Transaction" account, which requires the trader to use a Guaranteed Stop Loss Order (GSLO). The benefit of this is that you can trade on a smaller margin, plus sleep better at night. Any downside might be that the GSLO must be placed a minimum of 5% away from underlying, but as I set mine around 10%, I don't see this as a worry.

The GSLO costs 0.3% to put in place, but is a one-off fee per trade. You have the ability to ratchet up the stop position every day, if you like, at no charge. I believe CMC charge EVERY time the GSLO is moved.

My research of MAN Financial and GET showed no GSLO, plus I was concerned with the liquidity of GET. CMC charge $AUS35/month for access to stock exchange software re prices. IG Markets pay this for you, so you are getting a bit of value for the commission.

I have no ties with IG Markets, other than as a client, so have no interest in pushing their barrow. It's just that they came up best for me here in Australia, under the conditions I wish to trade. There have been no complaints among my acquaintances on other Australian forums about artificial price spiking. Dare I mention here that this has happened in Oz, but the trades affected were reversed when the trader complained! (To the CFD provider's credit).
 
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