Anyone trading CFD here?

J

Jaques

Is it good trading CFD?I heard that only foreigner can trade CFD due to SEC regulation.

So is there anyone here really trading CFD?Actually I think this wont be a problem for americans to trade CFD since the CFD company is established abroad.

I know that there are a lot experienced traders here,so want to ask for some advices.

What is the advantage and disadvantage of trading CFD?
Commision,bid ask spread,cost of carry,broker,safety of deposited fund.

Any reply would be welcome.Maybe you didn't trade or know CFD before,but I think any comment is valuable for me,since I can be considered know little about CFD.
 
cfd's are pretty big in aus here.

CFD's are pretty much exactly like a futures contract except without expiry and you must pay "open interest" on it. essentially a charge for the amount you margin when trading a cfd. This amount will vary from provider to provider.

CFD will be based on the underlying share/futs/comm index. there's nothign special about them, if your a good trader you and can predict the directon of the underlying stock/bond/comm you can make money with anything CFDs, Futs, Options, Warrants etc etc.
 
Quote from Jaques:

Is it good trading CFD?I heard that only foreigner can trade CFD due to SEC regulation.

So is there anyone here really trading CFD?Actually I think this wont be a problem for americans to trade CFD since the CFD company is established abroad.

I know that there are a lot experienced traders here,so want to ask for some advices.

What is the advantage and disadvantage of trading CFD?
Commision,bid ask spread,cost of carry,broker,safety of deposited fund.

Any reply would be welcome.Maybe you didn't trade or know CFD before,but I think any comment is valuable for me,since I can be considered know little about CFD.
More...

Actually, even if it's an overseas company they are still prohibited!

The only problem with CFDs is that it is mainly an OTC market (I say mainly cause apparently the Aussie stock exchange is planning on listing them) so you always trade against the dealer, which is not a good thing in general.
 
The big advantage with CFD's is when you are short the market and wish to hold your position for a few days. You get paid interest each night you hold, rather than having to pay your CFD provider which is the case if you are long. It's a lower rate then when you're long the market but it's something. For my style, I love it. :)
 
Quote from aus_SPIder:

cfd's are pretty big in aus here.

CFD's are pretty much exactly like a futures contract except without expiry and you must pay "open interest" on it. essentially a charge for the amount you margin when trading a cfd. This amount will vary from provider to provider.

CFD will be based on the underlying share/futs/comm index. there's nothign special about them, if your a good trader you and can predict the directon of the underlying stock/bond/comm you can make money with anything CFDs, Futs, Options, Warrants etc etc.
More...
Yeah,I forgot CFD is legal in Australia.That's good,I think due to the lower margin and lot size required by CFD,it is good for retail trader,no matter from capital or diversification purpose.

Is there any site regarding detail of Australia CFD trading?
 
Quote from MTE:

Actually, even if it's an overseas company they are still prohibited!

The only problem with CFDs is that it is mainly an OTC market (I say mainly cause apparently the Aussie stock exchange is planning on listing them) so you always trade against the dealer, which is not a good thing in general.
More...
It is also my concern,the broker is also the market maker,I heard that sometimes they offset the trade between client rather than offset in international OTC market.The consequence of this action is very large bid/ask spread,can't trade during volatile period,and etc.
Don't know whether it is true.

Currently I have two CFD site for choice,one is http://www.aleccohfx.com/index.htm
the another is
http://www.gcitrading.com/

Apparently aleccohFx has better reputation than GCI.
The advantage of GCI is wide range of CFD product.
So I don't know which one should I choose.

Does anyone have good idea for me?
 
Quote from Cherrypicker:

The big advantage with CFD's is when you are short the market and wish to hold your position for a few days. You get paid interest each night you hold, rather than having to pay your CFD provider which is the case if you are long. It's a lower rate then when you're long the market but it's something. For my style, I love it. :)
More...
Can you give me the site of receiving interest if sell short.
GCI trading still charges 2% interest on short CFD,the long position is even higher,8%..
 
Quote from Jaques:

It is also my concern,the broker is also the market maker,I heard that sometimes they offset the trade between client rather than offset in international OTC market...
More...

Actually, they internalize the order flow all the time, not just sometimes. It's standard practice, why wouldn't it be!? The cost of hedging every customer trade with the outside world would be prohibitive and unnecessary. I don't think this is a problem. The problem is that they are on the other side of all your trades and they control the data feed, so they can do to you pretty much anything they want.
 
When playing with derivatives, they all have a nasty side. With options it can be volatility or time decay working against you, with CFD's it can be the market maker. I only trade the CFD's of highly liquid stocks and that seems to reduce, if not eliminate the market maker issues. At the end of the day, if you're on the right side of the market, you win. If you're on the wrong side......
 
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