True cost of free Brokerage CFDs

[Trembling Hand]

Hi all
Just wondering what other traders thoughts were on the cost of free brokerage instruments were, Like CMCs Aussie200. Or the effect on your results a 2 point spread has on intraday trading considering the futures mostly have a 1 point spread and you can play the bid/ask rather than always buying/selling 'At market'. I have a blog and was putting together a post about the subject obviously some disagree

"If anyone thinks that a 2 point spread is a handicap then they should re-consider trading, period.” from Joules MM1 https://www.aussiestockforums.com/forums/showthread.php?t=6719


Would be interested in your reply

 

[reece55]

Re: True cost of free Brokerage CFD's

Trembling
Are you talking physiological here, because you are down 2 points from the start of your entry??

Personally, 2 points to enter the SPI is a small sum to pay to have a dabble in the index. However, I would never hold overnight, because the size of the contract is just too much to bare (if we are talking $50 a point style). It's really the interest cost and, if you are short, the dividend payment requirements. This is where it really adds up.

But in my view, if you are taking a long term view on the index, surely you would chose one of the mini contracts and therefore mitigate this risk...

Is this what you were after????

Cheers
Reece

 

[Trembling Hand]

Re: True cost of free Brokerage CFD's

Thanks for the reply.
Was thinking that really if you do the sums the free brokerage is more costly than playing the real instrument (SPI200). Will have a post about the sums soon. And over many trades (intraday more than swing, long term) that always buying/selling at the market has a real cost to your expectancy. Was wondering if anyone else agrees. I think the true cost of cheap CFD’s are more than the real thing mostly.

Like your blog will put a link to it on mine.

 

[wayneL]

Re: True cost of free Brokerage CFD's

Was wondering if anyone else agrees. I think the true cost of cheap CFD’s are more than the real thing mostly.

Absolutely!

In longer time frame trades it won't have much of an impact, but in day trading and scalping the impact is huge.

Futures all the way.

 

[reece55]

Re: True cost of free Brokerage CFD's

Thanks for the reply.
Was thinking that really if you do the sums the free brokerage is more costly than playing the real instrument (SPI200). Will have a post about the sums soon. And over many trades (intraday more than swing, long term) that always buying/selling at the market has a real cost to your expectancy. Was wondering if anyone else agrees. I think the true cost of cheap CFD’s are more than the real thing mostly.

Like your blog will put a link to it on mine.

Thanks for the comment on the blog trembling, I will do the same. The comments on your blog are insightful, love your work......

Having only traded a few contracts, I was not aware that the cost to trade the SPI directly on the SFE was cheaper than CFD providers. Obviously, if we are adding more to the COGS line in our personal P&L's, this will impact the profit, specifically if we are scalpers as Wayne says, where we are low margin profit takers....

Cheers

 

[Pager]

Re: True cost of free Brokerage CFD's

My

Never traded CFD,s but if you get a 2 point spread and so called free brokerage, it certainly is not free.

when you consider the costs involved trading a straight out futures contract compared to this so called "free brokerage" with 2 point spreads it just does not stack up.

If your serious with trading Index,s then futures is by far your best option, cheaper, and exchange traded.

 

[Trembling Hand]

Re: True cost of free Brokerage CFD's

Yes Pager I agree 100% but they are flogging this things (CFD accounts) to every one. Was hoping I would get a lot of people disagreeing with me/us.

 

[wayneL]

Re: True cost of free Brokerage CFD's

If your serious with trading Index,s then futures is by far your best option, cheaper, and exchange traded.

....and no counter-party risk.

 

[Trembling Hand]

Re: True cost of free Brokerage CFD's

Anyone wanting to see what you are up against intraday trading a "Brokerage Free” CFD index I have put an example up on my blog


Have a look. comments most welcome.

 

[>Apocalypto<]

Re: True cost of free Brokerage CFD's

Anyone wanting to see what you are up against intraday trading a "Brokerage Free” CFD index I have put an example up on my blog


Have a look. comments most welcome.

i am with you 100% when i called IG they told me the other 1 point is brokerage which at the time i thought fair enough but when i see your lay out i am a little shocked i will look at getting my self set up on the spi mini or mini 200 are they the same?

main grab that the cfd's guy's like ig offer is lower margin 350 IM for 5$ a point

1750 IM for full 25$ per point.

i agree it makes losses hurt far to much