is there an actual market for CFDs or are CFD firms just bucket shops?
- Thread starter cole_
- Start date
There is no market which I take you mean central exchanges for CFD's. Each broker that sells CFD's is the sole issuer and market-maker of those CFD's. When you are trading in those CFD's, you are basically trading against those brokers themselves. Read their disclosure document which they are required to publish on their websites IF they are regulated and you will see so.
They’re generally off limits to American investors which is why they are not a big product in the states. Until the SEC changes the rules, most retail is out of luck.
If you're in the UK where you can trade CFD's why not consider spreadbetting? It can have lower costs than CFD's and its tax-free.
MUST be FCA-regulated and have client funds segregation and deposit protection scheme membership.
Also, if you day-trade via CFD's or SB, you are just asking these firms to take your money away. They have to use quotes and spreads aggressively to hedge their real-time risk and this frequently leads to tight stops getting hit. If you take positions long-term follow the underlying market's trend, there is nothing the firm can do to stop you making a profit - more importantly, there is nothing they NEED to do to stop you making a profit.
MUST be FCA-regulated and have client funds segregation and deposit protection scheme membership.
Also, if you day-trade via CFD's or SB, you are just asking these firms to take your money away. They have to use quotes and spreads aggressively to hedge their real-time risk and this frequently leads to tight stops getting hit. If you take positions long-term follow the underlying market's trend, there is nothing the firm can do to stop you making a profit - more importantly, there is nothing they NEED to do to stop you making a profit.
There are multiple types of CFD brokers. IB for example offers spreads identical to the underlying for US equities. The risk is sometimes not getting any position.
What do they do with a very profitable trader? Can they kick him out like a casino? Or do they just suck it up because the rest will lose with them? If you swing trading the spread isn't a problem specially with this volatility...