I need this info specific for the AUS200 index cfd provided by IG Markets.
How exactly do they derive their prices for this product? it seems to be a combination of the SPI futures contract and the ASX200 index depending on the time of day. Also how do the forwards differ? are they cfd's of the futures contract?
I wondered how they could provide a product which allows you to trade an index seeing as an index is moved by the buying and selling of it's make up stocks rather than the buying and selling of the instrument itself like the futures. I was livid when I found the 10.00am open price was practically never the same as the underlying index open and was sometimes ludicrously different. And here i've been sitting thinking "what happened to the usual morning run that i rely on to make money"
The conclusion I came to is despite claiming DMA service these products seem to me in fact, synthetic and market made.
This raises a problem seeing as the prices are derived rather than made by market forces. This is further compounded if IG is the counter party because they have the advantage of seeing and hedging the real prices in the futures and the underlying index while quoting you some inaccurate made up price. I have come to the conclusion that these index cfd's represent a negative edge for the trader.
also I would like to hear input on trading the minis as a way of practicing pulling the trigger as I still have problems with this.
The moral of all this is never assume with the info these providers give you. Make sure you know exactly what you are dealing with and how it works. If you are looking for the sucker in the room and can't find 'em, it's YOU.