CFDs

[Idude]

Hello traders,

I'm not very familiar with CFDs other then the spreads seem to be pretty large but I was wondering about their bad reputation and why there are so many critiques. I seem to like to trade the YM and I find that the US30 charts are almost an exact copy of the YM so what makes them a worse choice than eminis?

 

[timsk]

Hi Idude,

I'm not very familiar with CFDs other then the spreads seem to be pretty large but I was wondering about their bad reputation and why there are so many critiques.

I may be mistaken, but I thought it's illegal to trade CFDs in the U.S.? Be that as it may, my impression is that it's the reputation of some (not all) of the CFD providers that's bad - rather than the product itself? CFDs are derivatives and, as such, attracts criticism from some quarters because they utilise leverage which means that the risk of losing large amounts of money is every bit as possible as making large amounts of money. Some say it's much more likely! As for the reputation of the brokers that offer CFDs, they will vary from one to the next. Much like banks or insurance companies, for every customer that's satisfied, there's another that's bitter and angry. Sometimes for good reason - sometimes not.

I seem to like to trade the YM and I find that the US30 charts are almost an exact copy of the YM so what makes them a worse choice than eminis?

Without knowing exactly what it is that you're looking at, i.e. which charts by which provider, I suspect you're comparing the YM (which is the e-mini futures contract) with the cash chart of the Dow. They will look very similar, although they are two distinct things which are not to be confused. If you're wanting more info' about the relationship between cash and futures, check out this Sticky: Essentials Of 'Indices'
Tim.

 

[Idude]

Yes you are right, US Brokers can't offer CFDs, I created this account in the US but I'm not living in the US right now.

I was looking at the dow (http://www.livecharts.co.uk/MarketCharts/dow.php) and at CFD US30 which seems to be petty much the same and then I looked at the emini YM which is similar in the chart but price lags about 70 ticks from the other two.