Direct Access help???

[badd boi]

Bid Ask Help!

Hi Racer,

I meant order book, sell at the buy, buy at the sell to which you referred.
I don't know anything about CFD's as I'm just a newbie.
I was thinking of Level II screens in particular as I am trying to understand them.

Is the Bid Ask(offer) you see on the screen the MARKET MAKER'S Bid Ask ,
i.e. their prices to buy and sell at, or are they your(the TRADER'S) Bid and Ask.

For example: if it's the market maker's offer price I am looking at then he/she is
wanting to sell to me. So his/her( the market makers') offer must be my bid,
if I am buying what he/she is selling.

The same follows if it is the market maker 's bid price - he/she is buying,
so the market makers bid price must be my offer, for me to sell to them.

Does that make any sense, Hope i have not confused the issue
That's the way I figure it though.
Not sure if I have gotten hold of the wrong end of the stick here,
as I am a complete novice and have not started to trade yet.

Can't seem to find any books on this though.
Only trying to make sense of it myself.
Any help would be much appreciated.
Badd Boi

 

[mcharlton]

Do you mean the trade reporting or the order book sell at the buy, buy at the sell prices?

If you trade CFDs you are acting like a market maker, so you are theoretically selling to the 'ordinary trader' who is buying the shares
QUOTE]

Racer- do you trade CFDs? If so could you give me brief guide as to the pros and cons of doing this...? and any web sites that are useful for info on this...

Cheers.

 

[Racer]

Yes I trade CFDs and have done so for several years now(Contracts for Difference), you don't actually buy or sell the shares as such, the strict term is a bit more complicated but basically, it is trading on the order book and on margin, so not for everyone and you need to be careful that you don't trade using all your free cash.. make sure you have at least 30 to 50% free. It is amazing how fast it can turn against you.
Several companies now do CFDs GNI, Etrade, Cantors, IG, TD Waterhouse, etc. Usually min amount to open a CFD account is £10 or £20K
You can trade a lot with a little money up front, you can go long and short, trade on the order book and on the 'other side' .. buy on the sell side and vice versa as I mentioned earlier.
Short positions give you a small amount of interest, but you have to pay interest on longs.
There isn't a expiry date like spreadbets or T+ trading etc.

Be warned though, CFDs aren't for beginners, because of the rapid movements in your free equity and I don't think you can open an account if you haven't been trading for some time

The bid price is the price you sell physical shares to the market maker. The ask price is the price you buy the physical shares.

No stamp duty on trades but you have to pay CGT unlike spreadbetting.

Hope that gives you some idea?

 

[mcharlton]

So...

Just a couple of questions...

How are the prices of CFD's worked out.. ie are they the same as the actual market.. and therefore change with the market... or are they based on the trades carried out just through CFD's.

What would be the best way to look into trading CFD's..? are the demo's on the various websites accurate?

Cheers.

 

[theknifemac]

So...

Just a couple of questions...

How are the prices of CFD's worked out.. ie are they the same as the actual market.. and therefore change with the market... or are they based on the trades carried out just through CFD's.

What would be the best way to look into trading CFD's..? are the demo's on the various websites accurate?

Cheers.

Hi mcharlton

You should be aware, there are two different types of CFD providers, one is more like a traditional spreadbetter where you are trading with the CFD provider and have to trade on their prices. With the other provider, your CFD orders or more strictly the hedge for your CFD orders is sent directly to the LSE order book. With the second provider you can send a limit order to buy on the bid / sell on the ask and avoid paying the spread if someone should decide to hit your bid / lift your offer. The first type of provider is more prevalent and will normally charge a lower commission, but you still have to deal with the normal SB bias issues there. "Proper" CFD providers like ETrade typically charge more in commission.

With the SB type CFD the prices you trade on as the providers, with the direct CFD you are dealing on live prices from the market. It is important to understand the distinction.

Users of the CFD products can comment on the demos better than I can.

Hope this helps

Stew