I have never seen the equivalant order appear in market depth on any orders i have placed via MFG DMA cfd........ am i not looking close enough ? or is it only here and there when they need to cover my position?
I know you can buy and sell shares in the synthetic market without the underlying shares existing!I have never seen the equivalant order appear in market depth on any orders i have placed via MFG DMA cfd........ am i not looking close enough ? or is it only here and there when they need to cover my position?
What risk do they take on in the first place?
That is my point exactly. There is only one transaction and that is the client opening a position in the market through the broker. You win they win you lose they lose. No risk has been forgone.
Then the broker debits the client the amount of loss incurred from the trade or credits the client the amount of gain which they extracted from the market.
Then that would not be a DMA trade if they did not take direct market participation. It would be a trade in a synthetic market.If they weren't hedged, they'd have to pay you your profit out of their own funds.
The client is not extracting the profit "from the market". The client is extracting the profit "from the CFD provider". The CFD contract is only between you and the CFD provider - the stock market is not involved. Nothing goes to the stock market (unless the CFD provider wishes to hedge the position). The CFD is essentially a "bet" with the CFD provider (the "bookie").
The sentence is about the broker.The client is not extracting the profit "from the market".
Then that would not be a DMA trade if they did not take direct market participation. It would be a trade in a synthetic market.
Is not!(which is their hedge).
In finance, a hedge is a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk.
In finance, a hedge is an investment that is taken out specifically to reduce or cancel out the risk in another investment. The term is a shortened form of " hedging your bets", a gambling term. Typical hedgers purchase a security that the investor thinks will increase in value, and combine this with a "short sell" of a related security or securities in case the market as a whole goes down in value.
A security transaction that reduces the risk on an already existing investment position. An example is the purchase of a put option in order to offset at least partially the potential losses from owned stock. Although hedges reduce potential losses, they also tend to reduce potential profits.
Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
This is the opposite of what you said a moment ago. If there is a parallel contract running in the market, then the market IS involved. What the hell are you talking about?
No, not the opposite of what I said before. We're talking about 2 different things on here, "market maker" and "DMA provider". If there's a parallel contract running in the real market, then that is DMA. I was talking about "market maker".
Maybe you should be more specific then?
If you are a DMA broker, and a client provides funds for you to make a trade, you take those funds to your liquidity provider to get the leverage. You place an order with the funds and leverage on the market, and provide your client with a parallel contract. If your client loses, there is less money on the table than at the beginning so they pay the difference to you. If your client wins, there is more money on the table than at the beginning, they take their profits and funds home, you return the leverage to your liquidity provider, that is it. There is no hedge. There is no risk taken on. Stop saying there is a hedge unless you can explain what you mean better or correct my interpretation of what happens.
If comsec provides me with a $10,000 margin loan then they don't care about which contracts I'm trading (as long as they're the sanctioned ones of course), just that at the end of the day they get their loan + interest back. At no point do they they become out of pocket if you win a trade. In which case would it be different and why?
With DMA CFD, they place order in market in their name, and a parallel CFD between you and them. Their market order and your CFD are parallel. Their market order and their end of the CFD are hedged.
There is no controversy in the terms used I don't think.
I have never seen the equivalant order appear in market depth on any orders i have placed via MFG DMA cfd........ am i not looking close enough ? or is it only here and there when they need to cover my position?
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