What They Wont Tell You About Cfds!!

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Paulds11

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Hi Henry.. I hear you.. so very loud and clear.. this is the one major problem of ALL participants in either spreadbetting or CFDs in that the real issue is the broker or bank making money out of you not just by the fees or even the spread but also in the difference they offer you a market and the difference they themselves can gain access to the market... (and that is discretionary too, so one day your trading goes unnoticed the next they have you earmarked because your making them lose money!!!!!!!! CHARLATANS all of them really.. its a scandal)

CFDs are not specifically a market on thier own... I mean when you place a CFD trade, the company offering the CFD does not go out to the wholesale market and then either place your "CFD" trade in a CFD market either through an exchange or between other brokers as I originaly thought when they say CFDs are an Over the counter product (OTC........OTC my A@@

. in the real spirit of the term OTC IT IS ABSOLUTELY NOT AN OTC PRODUCT (THEY ARE NOT TRADED BETWEEN BROKER FIRMS)
IN FACT CFD PRODUCTS are completely PROPRIETARY PRODUCTS !!! they are not an asset outside of the copnay that offers them to you !!! THEY ARE SIMPLY A STANDARD ADOPTED BY BROKERS, OFFERING THEMSELVES THE OPPORTUNITY TO "MAKE A MARKET" (WHICH ALWAYS MEANS FAKE MARKET THAT WILL BE REMOTELY LIKE THE UNDERLYING BUT IN REALITY NEVER IS EXACTLY IF THERES TOO MUCH MONEY TO BE MADE OFF YOU).

Now..... we all know that the best money in a market is made usually at market opening.. however I have tried unsuccessfully to participate in many opening market moves using CFDs and spread betting firms unsuccessfully because many of them do something very very strange to the opening breakout profile of the best indiceis that display this behavior e.g. the AXJO index from Australia. I can hardly find any CFD provider (remember these are Fake markets dont be fooled by the fact that you are using a DMA tool.. its a lie!!) that will alloe me to play the opening breakout of this market adequately without manipulation. e.g. Yahoo clearly showed the opening breakout profile rise of up to 45 points over the first 10 minutes. The platforms I used were flat at a predetermined hike in the market price on opening... after 10 mins the markets offered by CFD only declined until about 1 hour to 1.5 hrs later when the behavior of the CFD index began to resemble the profile of the underlying......DUDES THIS IS HOW THEY WORK.. STOP SPREADBETTING USING INDECIES THAT ARNT REAL (AND BELIEVE ME ITS NOT OBVIOUS SO ASK AND BE CLEAR ABOUT IT ) DEFINITELY AND USE CFDS WITH CAUTION

ok BY NOW i BET YOUR ALL SURPRISED RIGHT?.. HMMM... I WAS ASTONISHED!!!!!

All these claims about making a market simply mean they are offering you not only the doped horse but the racecourse too AND SO YOU ARE UNWITTINGLY STOPPED OUT EARLIER THAN EXPECTED OR LEFT TO RUN ON UNEXPECTEDLY DESPITE SETTING YOUR STOP LOSS.. BURIED DEEP WITHIN THE LITERATURE ARE CAVEAT LIKE "THE ACTUAL MARKET MAY DIFFER SLIGHTLY FROM THE UNDERLYING"... IS 40 POINTS SLIGHT??

YOU HAVE NOW BEEN WARNED... THIS IS WHY FED UP WITH THE INDUSTRY I WILL ONLY USE STOCKS OPTIONS AND FUTURES TRADES FROM A REPUTABLE BROKER AND EXCERSIZE EXTREME CAUTION WITH CFDS AND SPREADBETTING COMPANIES AND THEIR PRODUCTS....

use:

eTRADE (US ACCOUNT).. STOCKS & OPTIONS BASIC LOW PRICE BUT SUITABLE FOR END OF DAY TRADERS REALLY

THINKORSWIN: SIMPLY THE BEST OPTIONS PLATFORM AVAILABLE IN THE WORLD. PERIOD

iF YOU PREFER YOUR MECHANICAL TRADING AT HIGH FREQUENCY E.G. DAY TRADES USE TRADESTATION FOR FUTURES, ETFs AND ALSO STOCKS AND OPTIONS

OPTIONSEXPRESS; FOR STOCKS AND OPTIONS IN A WEB BASED INTERFACE THIS IS THE BEST PLATFORM

INTERACTIVE BROKERS GREAT MARKETS LOW PRICE AND NOW SOME ADD ONS TO IMPROVE MECHANIZATION OF TRADES IF YOU SEARCH AROUND ENOUGH

SAXO BANK dma TOOL (THEY OFFER CFDS AND WHITE LABEL EXACTLY THE SAME PLATFORM TO ETRADE SO WATCH ETRADE CFDS ALSO!!!!!!! THEY ALSO OFFER FUTURES THOUGH AND FX AND THE PLATFORM IS ACTUAL NOT BAD AT ALL

STOP WASTING YOUR TIME OTHERWISE UNLESS YOU KNOW WHAT YOUR GETTING INTO... MAN IM SO FRUSTRATED I THINK I SHOULD START A BLOG



LET EVERYONE KNOW WHAT IS GOING ON... EVERY CFD BID -ASK IS COMPLETELY DIFFERENT BETWEEN COMPANIES OFFERING THEM DEPENDING UPOBN THE WHIM OF THE COMPANIES OBJECTIVES TO INCREASE OR DECREASE THE PERCEIVED VOLATILITY OF THIER OFFERING OR TO CLIP AWAY AT MARKET OPENINGS TO STOP YOU MAKING MONEY AND ALLOW THEM TO PROFIT FROM IT..... ASTONISHINGLY BAD FORM

(PLEASE ANY SPREADBETTING FORMS OR CFD FIRMS DONT RESPOND HERE AND DEFEND YOURSELVES.. WE ARE NOT INTERESTED.. WE JUST WANT VIEWS FROM REAL TRADERS WITHOUT VESTED INTERESTS PLEASE, YOU ALL NEED TO KNOW YOU ARE COMPLICIT BY PROXY BECAUSE YOU OBSCURE THE INFORMATION THAT WOULD INFORM US IN MAKING GOOD DECISIONS AND IN MY BOOK THATS DISINGENUOUS

PAUL...BRINGING TRUTHS TO NEWBIES
 
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trade cfds on a DMA platform (gni,ig etc offer one) & you will not have the issues you metioned - you trade at market prices & can bid & offer your own prices.
 
As wallstreet has mentioned.

Please don't confuse "CFD's" offered by the likes of CMC etc, with direct access CFD's offered by GNI etc. They are completely different. When you use a direct access broker, your trade is a real share trade which goes directly into the order book. When filled your broker writes you a CFD and holds the stock on his book.
 
Whether or not the company decides to replicate your trade in the market and purchase the stock still has no bearing on the actual price they will offer you. A CFD is a proprietary product. If you trade a CFD through a DMA platform YOU ARE NOT GOING OUT INTO ANY MARKET, there is no CFD market as such.. with many exchanges yet.... and that means the trade is simply routed back to the organization and you are accepting prices that are OFFERED to you, not MARKET prices of stocks or similar in the real market!!!!!!
 
I wont read everything because it is written in capital letter, that s bad

secondly what u r telling us is absolutely nonsense
perhaps u forget to add something which is more important than everything else.

the reaction of the cfd company on your cfd trade depends on the volume of your trade.
high order volume trades will be placed directly at an exchange.

everything else will force the company to follow your mistakes. Thats want is running cfd companies into bancrupcy, forcing them to follow your mistakes.


"... I mean when you place a CFD trade, the company offering the CFD does not go out to the wholesale market and then either place your "CFD" trade in a CFD market either through an exchange or between other brokers as I originaly thought when they say CFDs are an Over the counter product "
 
Just proves that to have any chance of making money in this game you need to fully investigate what products you're trading in and more importantly how they really work.

Also, don't get taken in by the marketing.....
 
Paulds11 said:
Whether or not the company decides to replicate your trade in the market and purchase the stock still has no bearing on the actual price they will offer you. A CFD is a proprietary product. If you trade a CFD through a DMA platform YOU ARE NOT GOING OUT INTO ANY MARKET, there is no CFD market as such.. with many exchanges yet.... and that means the trade is simply routed back to the organization and you are accepting prices that are OFFERED to you, not MARKET prices of stocks or similar in the real market!!!!!!
Click to expand...


a dma platform (i.e gni touch for e.g) routes your order directly into the underlying cash equity market, i.e you are executing in a 'real' as you put it, market. all gni do is wrap ithat trade as a cfd for stamp duty purposes. i execute on trades on SETS using both a cash DMA platform & a CFD DMA platform - both order books are identical, nothing is different or manipulated by the cfd provider. if its not a true DMA cfd platfrom then it will be very different.
 
pssonice said:
secondly what u r telling us is absolutely nonsense
perhaps u forget to add something which is more important than everything else.

the reaction of the cfd company on your cfd trade depends on the volume of your trade.
high order volume trades will be placed directly at an exchange.

everything else will force the company to follow your mistakes. Thats want is running cfd companies into bancrupcy, forcing them to follow your mistakes.


"... I mean when you place a CFD trade, the company offering the CFD does not go out to the wholesale market and then either place your "CFD" trade in a CFD market either through an exchange or between other brokers as I originaly thought when they say CFDs are an Over the counter product "
Click to expand...

---------------------
pssonice... hmm... ok lets take it step by step

1. Writing in capitals is not illegal, I wont get arrested and although I sympathize with your view Im not sure that saying you wont read it does you any justice, but I will try to refrain from that in future...

2. If the reaction of the CFD company is dependant upon the volume of trade then I believe that supports my answer regarding the variation that exists between the CFD price (& by the way perhaps also the extent of spread offered to the customer depending upon the type of access/platform you have..)

3. Just because you have a DMA platform this does not mean ALL your trades are placed at the market because there isn't in all cases a CFD wholesale market as such. Usually with DMA this means the company may behave to provide you with the REAL market data but then they will charge you a commission on the overall trade.. this is why DMA is good for CFDs but it isnt exactly that way for a lot of CFD providers and this is my point. Many are fixing the market and they wont tell you easily about it unless you ask ask and ask again... A CFD provided by a broker is a product in which the broker is making the market, ie they are involved in establishing a price and bringing liquidity to that market for you... also to consider is whether the company are Market Making ( small variations in the compared to real market. or Market Taking (DMA offerings)... I say avoid CFD offerings where the company is market Making

4.When you say everything else will force the company to follow your mistakes, I am not so sure that all trades are replicated ( but I doubt it). Heres why. If the company has a customer take a position and another take an opposite position then the CFD provider has no need to Hedge your trade in the market does it??? No dude.. no.. Can you imagine how exposed any compnay would be through margin requirements if they replicated all the trades despite commanding less margin from the customer as is the case with CFDs?
the company may be obliged to pay you interest on long stock positions that yield dividend in the real markets but this is because they are complying with the terms of the offer to you, not because they actually hold the stock.

With all due respect, I understand some of your sentiments, but I am not convinced that every trade is replicated at all... and I put it to you that that would bankrupt any broker very quickly indeed....

Please feel free to comment

Cheers
Paul
 
wallstreet111 said:
a dma platform (i.e gni touch for e.g) routes your order directly into the underlying cash equity market, i.e you are executing in a 'real' as you put it, market. all gni do is wrap ithat trade as a cfd for stamp duty purposes. i execute on trades on SETS using both a cash DMA platform & a CFD DMA platform - both order books are identical, nothing is different or manipulated by the cfd provider. if its not a true DMA cfd platform then it will be very different.
Click to expand...

Walstreet

OK I see, yes.. GNI are certainly one of the good guys in my book (even if the demo temporarily messed up with my Worden Charts package :) ) Certainly then there is a huge difference with CFD and DMA CFD but I have just had confirmed to me by Saxo bank that what I was saying in essence is absolutely correct, in that they would not feel the need to perhaps Hedge a trade or replicate the trade in all cases, especially if their are opposite trades placed by their customers which in effect hedge against each other.

With CFDs its DMA or no go in my opinion... Saxo bank told me definitely for what Im looking to do I should use DMA only.. Meanwhile they are still investigating the reason that their CFD on and index was hugely different from the underlying at market opening.. (In their defense this may be due to the platform being a demo product.. very nice people at that bank, sincere and honest).
 
Paulds11 said:
Whether or not the company decides to replicate your trade in the market and purchase the stock still has no bearing on the actual price they will offer you. A CFD is a proprietary product. If you trade a CFD through a DMA platform YOU ARE NOT GOING OUT INTO ANY MARKET, there is no CFD market as such.. with many exchanges yet.... and that means the trade is simply routed back to the organization and you are accepting prices that are OFFERED to you, not MARKET prices of stocks or similar in the real market!!!!!!
Click to expand...

When you place an equity trade through a DMA platform you are trading real shares under the name of your broker.

For Example,

You place a bid for 100,000 VOD shares in the market via SETS at 140 and your order is filled. You have now purchased 100,000 shares of Vodafone under your brokers name. Your broker will then write and issue your account a CFD for that purchase, deducts the margin required and charges you a commission for the privilege.
He now owns 100k VOD shares and you have the 100k long CFD.
When you come to sell that 100k, you place a 100k sell order in the market (again real shares) the trade is filled which has squared off the brokers book. He then settles your CFD at the correct P&L and funds/debits your account accordingly.
Of course this back office process is all automated and he makes his money from the commission charged regardless of the trade outcome

You are correct in saying that there is no CFD market, a CFD is merely a contract between two parties. CFDs never actually change hands on the underlying. Two people may of course be trading cfds, but the conversion from shares to cfd must occur for each party involved. It must only be real shares trading on the underlying as you have no idea who the counterparty is, it could be a fellow trader, it could be the company itself buying back shares. You must deliver or take delivery and pay for those shares.

This however is nothing like the CMC non DMA type model. They are indeed offering you CFD's BUT they are the market for those CFDs. You are not trading on the underlying, you are trading from them. Providers who offer non DMA cfd's have a business model similar to the SB companies, ie take a commission via a fee or from the extra spread, don't hedge the overall net exposure and make extra from the losers.
 
Captain Haddock said:
When you place an equity trade through a DMA platform you are trading real shares under the name of your broker.


Captain H

I dont believe you disagree with what I said or that I have contradicted you, I never mentioned SETS.. you did. However I think your answer is good and perhaps more explanatory of the DMA side, but I did indeed do quite a bit of research into this and you have agreed with me in most areas except for one issue we may have to "agree to disagree on".

It is my view that not every stock CFD trade is hedged in the actual shares market even for some firms offering a DMA product does not necessarily mean you are placing stock trades on behalf of the broker in the market... Of course I may be wrong here but it isnt how I understood it...meanwhile...what the hell, it all makes for good discussion.. some issues about CFDs are really coming to the surface..

OK.. I must reduce my ignorance of SETTS ..........be back soon... in the meantime.. my default switch is"I AM ALWAYS RIGHT " .. of course
;)
Click to expand...
 
From IG themselves............GNI will be the same.

"L2TM is one of only a limited number of CFD trading platforms which allow clients to execute directly into the
exchange order book, automatically creating a CFD position. IG’s software executes two transactions
simultaneously — a CFD with the client and a hedge on behalf of the Group via the stock market. The result
of these two transactions taking place simultaneously is to avoid market and execution risk to IG."
 
Sorry notquiterandom Spreadbetting and DMA are completely different products despite sometimes relating to the same instruments.
 
Well they are still very valid tools to trade with dont get me wrong on that, but me personally.. I am uncomfortable with them as a format because they are a contract between you and the provider and the prices can be manipulated...

Use them especially if you Swing trade or trade long term but where possible trade futures shares and options in direct access accounts
 
Hi everyone... heres something that is about to change the Game for all this CFD murky unknowns!!
Stop trading OTC CFDs and start with a proper brokeage account OR trade EXCHANGE TRADED CFDs' a world first:

http://www.asx.com.au/investor/cfds/education/course_01/index.html

Now that is worth trading...... and supports everything I have said so far in this thread...

ASX will soon be listing ASX CFDs. These will be the first CFDs to be traded on an Australian Securities Exchange market. (Please please please allow me access to the AXJO index). ASX CFDs are fundamentally different to the current Over-the-Counter (OTC) CFD because they are the only CFDs traded on ASX. They also offer price transparency, exchange independence and greater investor protection.

ASX CFDs will initially include:

* The top 50 stocks listed on ASX
* Key global equity indices
* A range of major foreign currency exchange rates
* Selected commodities

ASX CFDs will be listed on the market operated by the Sydney Futures Exchange (SFE). Access to this market will be possible through a large network of both full service and discount brokers.

WOW EXCHANGE Traded CFDs.. I think thats a first isnt it?
 
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