Trading CFDs

Re: Trading CFD's

Guys,

Thanks for all of your help so far.

I had a chat with one of the CMC Markets dudes recently when I asked him about hedging the customers' position on the market and the rumour that they're changing the spread for their favour.
He said the positions are not always hedged but couldn't give me a clue of course about the rate.
Widening the spread is an urban legend and they only offer real market spreads for their customer - he said.

If that's true then they must have huge number of transactions every day where they can profit from the commissions otherwise the majority of the positions should be closed out out of the money to be able to generate decend income for the CFD provider.
I assume ASIC has throughly investigated their business practice before they issued the licence for these companies...

Anyway, it's good to know that you can get a good profit by trading CFDs.
That means it's still someting that's worth to take a little closer look.

Re: Trading CFD's

rookie said:

Guys,

Widening the spread is an urban legend and they only offer real market spreads for their customer - he said.

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It may be an urban legend for stock CFDs, but I suspect that is not the case for Index CFDs. How else can you explain why there are no brokerage charges for trading Index CFDs

Re: Trading CFD's

I have been trading CFD's with Man Financial for 1 year now. I prefer Man as when I place an order with them I can see my order placed in the market in a second. Their brokerage rates are competitive at 0.125% of total CFD trade (minimum of $12.50). I checked out CMC Markets (Market Maker) but was told to be careful with this firm as they widen the gap or spread between the buying and selling prices. Also checked out IG Markets but was advised I couldn't move the stop loss price, that stop loss orders were fixed on the day you book the trade. The biggest mistake I have made with CFD's is trading in low liquidity shares. I now only trade CFD's on the top 100 shares with a 5% margin and only certain shares that have a 10% margin.

Re: Trading CFD's

Hi Cathye,

I see this is your first post.

On your signature, i am not sure what the forum rules are in relation to promoting this type of stuff.

Personally i dont think this is the place for it, but i dont make the rules.

Regards Stink

Re: Trading CFD's

personally, i don,t have a problem with comparisons, in this case CFD providors is'nt that one of the reasons for "forums", porkpie

Re: Trading CFD's

porkpie324 said:

personally, i don,t have a problem with comparisons, in this case CFD providors is'nt that one of the reasons for "forums", porkpie

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Hey Porkpie,

no problem with the post mate, i was referring to the signature.

But like i said i dont know the rules on this stuff, its just my opinion.

Cheers Stink

Re: Trading CFD's

I've been trading CFD's for a while now. No problems to date and making a bit of money. However, a couple of points/observations I would make following my experiences, which hopefully will enlighten a few considering their options with trading CFDs.

I have been using etrade for my normal share trading for the past few years and have no complaints - good service and reliable trading platform availability.

E-Trade also offer CFD trading, so it seems logicial to use them for CFD's too - so you can trade both shares and CFD's via the same webiress platform simultaneously. When you open your CFD account with etrade, the account is actually opened with MAN Financial, but as I say all the trading is done via etrade. They make it patently clear as the forms have MAN on the letterhead etc. This was not a major problem.

If you have a problem you call etrade, who in turn call MAN (at least I think this is how it works). This double handling was time consuming and was never successful as responses were always slow. I once queried the withholding tax I was paying. As a New Zealander, non resident in Australia, I was entitled to a lower rate to be charged on interest received. Despite assurances that this had been adjusted, it never was - a quick calculation showed that I was paying 50% and not the lessor rate. I gave up trying to get it changed in the end and decided to change providers. The main reason for changing, though,, was the more expensive brokerage charged by MAN.

MAN's brokerage rates were expensive. Man charged 1.25% for CFD trades. There's was also a minimum of around 17 dollars - cant remember the exact minimum. (these rates may have changed now.)

I now use FPM (First Prudential) for CFD trading. Cheaper brokerage rates (1%) and minimum trade rates ($10). Think the difference is minor?? It isn't and the difference in rates can be the difference between profit and loss. If you do several trades per day, the brokerage adds up, so don't pay more than you need to.

FPM also use the webiress system, so the same trading platform I was used to using at etrade - a major plus. Its worth noting that FPM will charge you another $30 a month if you want live news (on top of the usual $55 monthly fee).

As I still trade with Etrade for my normal share trading (via webiress/power e-trade), I get the news via etrades webiress. Also worth noting, webiress won't run twice/simultaneously on the same computer, at least not mine. So you need a 2nd computer if you use two webiress providers, like I do.

Having DMA, direct market access, is most important! With MAN and FPM, when you open a CFD trade, the underlying shares are purchased directly from seats. There is no human intervention and you are not buying them from the provider. If you are monitoring the market depth, you will see the shares disappear from the respective queues immediately, when you buy and sell.

Some providers don't provide DMA access to the asx. They instead, provide their own prices. This is dangerous because you "may" not be observing the "real" market depth situation and you are not buying the actual shares.

Just to make the point, the memory is fuzzy this time of night, so the rates quoted for etrade and Man will need to be checked if you are doing current comparisons.

While the leverage provided when trading CFD's is great, I'm sure you are all aware that it can bite you when the price goes against you. Holding live trades overnight can be a real gamble. If the price gaps up/down against you it can be expensive. Also, holding Long trades overnight incur an interest charge - short trades get you a credit. So, usually, it is best to exit the trade before the close and buy in again the next day. This is why brokerage rates are important - they add up!

regards

Re: Trading CFD's

hello,

whats it matter whether they hedge or not

CFD: contracts for difference, you win/lose depending on which way you have taken your position

you never will own/sell the share certificate with CFD

you have a contract with IG, ManFin or MAcBank for the difference

dont know why they carry on with all the cover

thankyou
robots

Re: Trading CFD's

robots said:

whats it matter whether they hedge or not

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Because if we can revel in the safe feeling that they hedge in the market, it's possible for us to deny to ourselves for a little longer that CFD providers are just bookmakers.

Re: Trading CFD's

Why are CFDs banned in the U.S.A.

Bob.

Re: Trading CFD's

Bobby said:

Why are CFDs banned in the U.S.A.

Bob.

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Bobby

A guess.... lobbying from the futures exchanges who have their single stock futures product.

Re: Trading CFD's

wayneL said:

Bobby

A guess.... lobbying from the futures exchanges who have their single stock futures product.

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Thanks Wayne

Regards
Bob.

Re: Trading CFD's

cathye said:

I have been trading CFD's with Man Financial for 1 year now. I prefer Man as when I place an order with them I can see my order placed in the market in a second. Their brokerage rates are competitive at 0.125% of total CFD trade (minimum of $12.50). I checked out CMC Markets (Market Maker) but was told to be careful with this firm as they widen the gap or spread between the buying and selling prices. Also checked out IG Markets but was advised I couldn't move the stop loss price, that stop loss orders were fixed on the day you book the trade. The biggest mistake I have made with CFD's is trading in low liquidity shares. I now only trade CFD's on the top 100 shares with a 5% margin and only certain shares that have a 10% margin.

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I use IG for trading CFD's on US stocks and there's no problem with moving the stop loss. I'd be surprised indeed if you can't do the same with ASX stocks.
I think you may have misunderstood what IG told you. Unless they have a rule that you can't move the stop on the day you place it, you must wait till the following day.
If this is the case then such a rule shouldn't concern you.....moving the stop on the same day you place it is only going to cause you to get stopped out frequently. You need to give a trade a few days to work out and make a decent move in your favour, before you go fiddling with the stop.

Bunyip

Re: Trading CFD's

bunyip said:

I use IG for trading CFD's on US stocks and there's no problem with moving the stop loss. I'd be surprised indeed if you can't do the same with ASX stocks.
I think you may have misunderstood what IG told you. Unless they have a rule that you can't move the stop on the day you place it, you must wait till the following day.
If this is the case then such a rule shouldn't concern you.....moving the stop on the same day you place it is only going to cause you to get stopped out frequently. You need to give a trade a few days to work out and make a decent move in your favour, before you go fiddling with the stop.

Bunyip

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i have no problems too with moving/changing limit & stop. it both works via web-based IG Market website or mobile dealing. my last trade was this friday and i did change my limit & loss while i were in a position.

Re: Trading CFD's

Guys,

"Bourse in world first with CFD exchange"
http://www.theaustralian.news.com.au/story/0,20867,20367318-643,00.html

I don't really understand the short/long-term consequences for DIY traders of this step from SFE.
Could any of you CFD-savvy gurus explain me what we can expect from next April? Cheaper commissions, higher volume, wider spreads, etc?

Re: Trading CFD's

joslad said:

FPM also use the webiress system, so the same trading platform I was used to using at etrade - a major plus. Its worth noting that FPM will charge you another $30 a month if you want live news (on top of the usual $55 monthly fee).

As I still trade with Etrade for my normal share trading (via webiress/power e-trade), I get the news via etrades webiress. Also worth noting, webiress won't run twice/simultaneously on the same computer, at least not mine. So you need a 2nd computer if you use two webiress providers, like I do.

regards

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Interesting comment there joslad. I suppose it is a conflict of interest for etrade to allow FPM to use the same platform as they go with Manfinancial, however, I am also with FPM & this is linked to my webiress platform that I use from AOT/Comsec linked to a marginlender, so no extra fees are involved for the CFDs even though it is a different provider

Re: Trading CFD's

Just found that IG markets require a 15 point diff to place a GSL ~~ SHeeze !!

What do the others want ? regarding GSLs

Bob.

Re: Trading CFD's

what is the opinion of trders with reference to CFDs and the length of a trade.Do people think it is best to be in and out as quick as possible and thus reducing the interest paid or go long and get a good rise in price and the interest is more than taken care of

Re: Trading CFD's

alankew said:

what is the opinion of trders with reference to CFDs and the length of a trade.Do people think it is best to be in and out as quick as possible and thus reducing the interest paid or go long and get a good rise in price and the interest is more than taken care of

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Hi Al (I'm also new here so take this with a grain of salt) I think it largely depends on what you feel comfortable with.........If you are a "trading" kinda guy and like action then short trades may better suit you, but if your analysis of a stock is sound and you are confident with their longer term prospect, then I would hang on at least until your "trend" has been proven, then hang on longer while ever it is "behaving" itself.

I have just signed with Green CFD....I dont know much about them at this stage, but gut feeling, I like the way they operate....Phone assistance is V good/helpful (even friendly!!..........unusual in this day and age eh??)..........and this is what impressed me about them.....they will let you sign up for their "training academy" (8 weeks) (It is optional if want to sign for the t/acad.(I personally didn't) They also give you $100 in your account to do up to 100 trades with no fees...They figure they want your business long term so the better "trained" you are the more money they will make in the long term .................Now that sounds like a Co. who is trying to do the right thing to me, but as i say, only early days for me; After I have used them for a while I'll post further . (Anyone else had exp. with "Green". . ??)

PS And yes they are DMA (Platform is a little slow to load in but once loaded seems good so far) Cheers.

Re: Trading CFD's

Sharing my experience:
I'm an ETO (options) trader on some of the ASX top 20 from 1 hour to 7 days max.

I traded cfds for the first time last month (with 2 providers) but got burnt sadly due to not paying enough attention to the COST of both cfd brokerages and 1% GSL !!! Those brokers sure make lots of money. Example: My last cfd trade on 4000 x ANZ cfds going long was supposed to profit $1300 but the GSL + brokerages (entry and exit) + interests totalled to more than $1000!!!! With costing like this, a few losses could have sent me broke in no time. Boy, do I need serious cfds education. If I were in options, the same trade would've cost me approx $100 in OCH and brokerages, with a nice profit of approx $800 (delta: 0.6+)

Anyway, I figured that Im not the one to leverage a cfd trade without GSL and so I went back to ETO. I feel very at home now.

If anyone has any suggestions, please feel free to comment.