What is CFD Trading?

B

Bryantrades

Hi everyone,

Since I started trading I have focused solely on NASDAQ and NYSE listed equities. Upon doing a little reading I found out that CFD Trading is illegal in the U.S. and Brazil. Seems to be allowed pretty much everywhere else. Can CFD brokers allow its traders to trade the NASDAQ and NYSE equities? Could CFD Trading be compared to paper trading if the trades never reach the actual market? Is it in the benefit of the broker for CFD Traders to lose?

Thanks
 
Depends on the broker and how the orders are handled. DMA like IB has interests aligned as the orders are hedged.

How is it paper trading if the profits are real? It's a contract like any other. Are options contracts paper trading? What about futures? Is the qualifier that orders reach a market?
If two people transact in real estate without placing an ad, is the transaction "real"?
 
If you have enough equity to trade on an exchange, then forget CFD. Most time, your broker is trading against you, most broker don't hedge and they believe the high leverage CFD offers will help you blow up your account.
 
d08 said:
Depends on the broker and how the orders are handled. DMA like IB has interests aligned as the orders are hedged.

How is it paper trading if the profits are real? It's a contract like any other. Are options contracts paper trading? What about futures? Is the qualifier that orders reach a market?
If two people transact in real estate without placing an ad, is the transaction "real"?
More...
someone who is a beginner asks a question and you post an acronym.
use your head.
 
Most CFD brokers are bucket shops, with even higher leverage than futures. There is no way they can hedge a 15 bucks (or whatever) margin per ES contract.

But if you can make money, and they send the profits back to your bank, do you really care?
 
d08 said:
Depends on the broker and how the orders are handled. DMA like IB has interests aligned as the orders are hedged.

How is it paper trading if the profits are real? It's a contract like any other. Are options contracts paper trading? What about futures? Is the qualifier that orders reach a market?
If two people transact in real estate without placing an ad, is the transaction "real"?
More...

Great answer thank you. I think the key part is " how the orders are handled" which will definitely vary by broker.
 
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