CFD Market Makers vs. Providers

[Interactive Brokers]

Thank you. It's a pain in the butt, but that's the way it is (for what I trade i.e. NASDAQ stocks).

Jimmy1jag:

By the way if you or other Trade2Win traders would like us to offer CFD's to our other products offerring (e.g., shares, futures, forex, options, warrants, bonds, ETF's, SSF's) please let us know in our thread. Afterwards we promise to strongly consider your feedback.

Thank you in advance
Interactive Brokers

 

[OpenMind]

I'd definitely like IB to provide CFDs. The CFD marketplace needs much more competition. We need a price war there.

 

[jimmy1jag]

I'd definitely like IB to provide CFDs. The CFD marketplace needs much more competition. We need a price war there.

Absolutely.

It needs someone to come along and undercut the current providers considerably, with the sole purpose of luring as many customers away from their existing provider as possible (thereby covering their cost to market asap).

But in addition to low commission rates they have to be able to excel on quality of platform (to include DA with all its benefits), markets offered and customer service and support.

In my view, this isn't unreasonable.

 

[neil]

IB Link up maybe for CFD's

Absolutely.

It needs someone to come along and undercut the current providers considerably, with the sole purpose of luring as many customers away from their existing provider as possible (thereby covering their cost to market asap).

But in addition to low commission rates they have to be able to excel on quality of platform (to include DA with all its benefits), markets offered and customer service and support.

In my view, this isn't unreasonable.

If Halifax Bank uses City Idex to provide CFD's then maybe Interactive Brokers could link up with a UK Bank to provide CFD's etc ?

Any thoughts Interactive ? :?:

 

[Interactive Brokers]

Neil:

Considering how much positive feedback we get tin us offering CFD's will determine if we offer the product.

Yes there are entities that would offer us their CFD product or another alternative would be if we offer the product ourselves. Anything is possible, as long as their is a business case.

Thank you for your feedback
Interactive Brokers

If Halifax Bank uses City Idex to provide CFD's then maybe Interactive Brokers could link up with a UK Bank to provide CFD's etc ?

Any thoughts Interactive ? :?:

 

[Interactive Brokers]

Openmind:

Similar to what I posted to Jimmy1jag earlier.

What fee would be reasonable and attactive if we offer CFD's for UK shares? CFD's on German shares? And etc?

Thank you in advance.
Interactive Brokers

I'd definitely like IB to provide CFDs. The CFD marketplace needs much more competition. We need a price war there.

 

[OpenMind]

IB,
I have replied in the main IB thread. Let's continue the discussion there, to avoid duplication of posts.

 

[Euro_d]

CFD or SB which is it to be?

OK, before I drawl on, when I talk about CFD's please take this to mean a commission broker who mirrors the level 2 prices NOT a market maker who skews the prices. After much looking I like the look oe Etrade but am still looking so if anyone has good/bad or ugly experiences please post.

OK, to my point, sorry to be lengthy.
Unless I am missing something fundamental it would seem to me that CFD’s are potentially less profitable than Spreadbetting.
I accept that CFD’s have other advantages such as Level 2 (generally) prices so you can trade using real time analysis at the price you see.

Bear with me and then please check my analysis. If I am wrong then please correct me, if not then please give me a good reason to change to a CFD platform.

OK, let us assume I have £30,000 as a trading bank. As a conservative trader I will only risk 3% on my bank on any 1 trade so my risk is therefore maximum £900.
ADC ltd is at 354 and I see it as a buy. I decide to set the stop @ 340.
So to the platforms, lets ignore the spread:
SB:
My max allowable loss is £900 and my stop is 14 away from the buy which equates to £64 per point (900 / 14)
If the trade goes against me I lose £900 (64 times 14)

If, as I expect the trade goes well, say to 370 I decide to sell, 16 points to the better.
I will make 16 times £64 = 1024.

Same scenario with CFD’s.
If my max loss is fixed @ £900 then I can buy 6430 (approx) CFD’s:
Diff between 354 and (SL)340 =£0.14, (£900 divided by 0.14)
Trade down to SL:
Loss = 0.14 times 6430 = £900

Gain to 370:
Diff = 370 – 354 = £0.16 times 6430 = £1028

So far so good? We are making almost the same amount on either platform. We get a slightly better spread on CFD’s and more accurate fills.

Now lets look at the charges.
On the SB platform, that’s it, nothing.
On a CFD platform the best I have found is ETrade who charge £10 in and £10 out. Plus financing. OK lets assume the trade is only a few days and therefore the financing charge is something like 6.5% per year. On the above example it would be only: 6430 times £3.60 (taking and average) times 6.5% / 365 times (say) 3 = £12.

So now our £1028 looks like £996.
A difference of £28.

I suppose one could argue that this could easily be offset by the better spread on the CFD?

Comments welcome.

Dave

 

[barjon]

.....................I suppose one could argue that this could easily be offset by the better spread on the CFD?...........................

Comments welcome.

Dave

dave

yes, the sb "charge" is in the spread so the higher you bet the higher the charge.

jon

 

[Euro_d]

Morning all,
I agree with Jon, CFD is better. I tried to open a trade (S) on SHP this morning, the spread difference in the first half hour was up to 10 points with wild swings on D4F, not so on lev2!

Just for your interest I sent the following to D4F almost a month ago, still no reply. In my opinion that says everything!

I am on a trial of Global Traders platform and it seems very good. I like their customer service, very helpful and the platform is nothing fancy but seems efficient. They have trailing stops which I like very much. I will post more as I am learning the platform and the concept (money management) which is quite different to spread betting.

Dave
:

Sirs,
I am a client but using the SB platform.

My questions are:

What are the advantages of moving my account to the CFD platform?
What is the minimum initial deposit amount.
How to margins on CFD's compare to SB
Are the prices quoted by CMC level 2 real-time or do you make the market?
If you are market maker then please explain further the advantages over SB.

I am sure I will have more questions following your reply and prior to making a decision to move over to CFD's.

Regards

 

[BernardWG]

GNI and/or CMC for CFD trading

Just some advice. If you go brokers direct, indeed most don't want to talk to you. An IB is then your best option. Problem is the commissions. GNI is VERY expensive and I dont think you can get for CFD trading below 0.80 RT on a CFD trade over trade value. The margins are also very protective. And indeed you pay for the system, although very sophisticated. Thus for prof's. Good execution, but you must make big points to pay your commissions first.

Anyhow, CMC is a cheap market maker firm and many CFD instruments to trade (if you have the experience) You also can trade FX. The executions are sometimes odd. Sometimes the market has moved far in your direction and then you are only after a few minutes executed at your price ... This works also in the wrong direction, bye the way! The MarketMaker system is not as good as the platform of GNI, but you can live with it. Commissions and margins are low. Service is minimum, but at least you make quick money on trades because of low commissions. And if CMC misses your execution for some odd reason,... There is always another trade, correct ?

 

[Paulds11]

http://www.cfds.com/brokers_list.asp?region=na&broker=cfd#here

review of a few CFD providers

CFDs from uk?.. or DMA from US brokers...hmmm.. what a conundrum... if i had the money it would be tradestation hands down but they are a full market US company and day traders placing more than say 3 trades a day must deposit around $30000 gee thats a fair whack

enjoy

Paul