# Starting to trade CFDs



## jama_kj (24 April 2008)

Hi wondering if someone cold recommend a CFD provider for someone who is just starting out.

I've had a look at some such as IG Markets and Commsec but am unsure of which one to go with. I liked the platform of IG Markets but am unsure of the cmpanies reliability (does the money get pooled or is there anything i should be weary of about the org?). Obviously the reliability and security is there with Commsec but i really didn't like the platform.

Are there any other providers that ppl would recommend that is easy to use, DMA and relatively cheap as I am starting with just 30K? What do ppl think about Mac Prime?


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## jama_kj (24 April 2008)

*Re: Starting to trade CFD's*

just was reading over IG Markets PDS - do they provide DMA CFD's or STP


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## Trembling Hand (24 April 2008)

*Re: Starting to trade CFD's*



jama_kj said:


> just was reading over IG Markets PDS - do they provide DMA CFD's or STP




No they are Market Makers. MF global have DMA CFDs


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## Kauri (24 April 2008)

*Re: Starting to trade CFD's*



jama_kj said:


> just was reading over IG Markets PDS - do they provide DMA CFD's or STP




DMA is there if you want it  (with IG)  or you can go MM..

http://www.igmarkets.com.au/cfd/dma-equities.html 

Cheers
...........Kauri


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## jama_kj (28 April 2008)

*Re: Starting to trade CFD's*

do ppl think that there is a possibility of IG going bust, coz i noticed that it clearly states that clients will be considered as unsecured creditors. i've had a quick look at their company and noticed it's a listed company in UK and has a pretty big market cap, so i would think its fairly secure, yeh?

also is it only the market makers that allow you to trade CFD's on forex, gold, etc. because they can practically create markets for anything or can DMA providers allow this too?


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## kesso (28 April 2008)

*Re: Starting to trade CFD's*

Hope I am not hijacking the thread but I have a couple of questions. Firstly can you assuming current price is 155, buy if it rises and hits 159 up to a buy limit of 161, with a stop loss if done of 154 with any CFD?

I have just started an IG demo account and I thought I could do it but it worked out that the limit seems to mean sell if you get to that price, not what I wanted as it sold me out of a rising share price.

Also I think that the IG demo is a market maker, as I did the above over the weekend and this morning the low is 162 but the demo program bought me in at 159 and sold at 161. The high is 167. Can not work that one out.


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## cogs (28 April 2008)

*Re: Starting to trade CFD's*

Hello kesso,

You need to get a much clearer picture of what and how IG and CFD's work in general.

The demo account has no effect on the market (not influencing price) compared to live trading. It is quite easy to make a bundle with the demo account.

I have recently opened an account with IG 'Limited Risk' . You need to look closely at the 'spread price' and the 'displayed price' to understand where to place an order and market price swing in relation to the according spread. 

In your posting it appears your statement - 







> " I did the above over the weekend and this morning the low is 162 but the demo program bought me in at 159 and sold at 161"



 it would appear that you are viewing the chart price which doesn't take into account 'spread'.

IG hedge heavily and you will need to be trading a good trend or your stops are taken out every time, they also appear targeted.

Please do not take this as professional advice, just my experience. Hope it helps.


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## Trembling Hand (28 April 2008)

*Re: Starting to trade CFD's*



cogs said:


> The demo account has no effect on the market (not influencing price) compared to live trading.




Neither does the market maker model.



cogs said:


> IG hedge heavily and you will need to be trading a good trend or your stops are taken out every time, they also appear targeted.




Could you explain this a bit further. From my understanding with MM they don't directly hedge every trade. And have yet to see a price moved by a CFD provider just to hit a small punters stop.


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## cogs (28 April 2008)

*Re: Starting to trade CFD's*

Hello Trembling Hand,

Like I mentioned in my posting "Please do not take this as professional advice, just my experience."
You may have experienced differently.

Who was/is the small punter?


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## Trembling Hand (28 April 2008)

*Re: Starting to trade CFD's*



cogs said:


> Like I mentioned in my posting "Please do not take this as professional advice, just my experience."
> You may have experienced differently.
> 
> Who was/is the small punter?




I would guess 90% of people using CFDs are small punters. But my question was about your stops being 'targeted'. What was your experience of this. I assume this means either the CFD provider moved their quoted price away from the underling market or they moved the actual physical market just to hit your stop. Is that what you mean?


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## cogs (28 April 2008)

*Re: Starting to trade CFD's*



> 90% of people using CFDs are small punters



 Ah I see.

Surely you have experienced what would appear to be 'stops being targeted'? It's probably just me. Anyone else?



> I assume this means either the CFD provider moved their quoted price away from the underling market



 Your assumption may be correct as hedging can achieve this, no? Certainly in my experience it can be all too obvious.

My previous methods of trading, lets say without stops, definately puts a new light on returning profit. There are many views relating to 'stops' and I see many posted here. Let it be said that trading CFD's without stops is suicidal.


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## Trembling Hand (28 April 2008)

*Re: Starting to trade CFD's*



cogs said:


> Surely you have experienced what would appear to be 'stops being targeted'? It's probably just me. Anyone else?
> 
> Your assumption may be correct as hedging can achieve this, no? Certainly in my experience it can be all too obvious.




Actually no. I have never seen a CFD provider move a market to take out stops. The cost of doing so would be 100 times more than the gain of a couple of retail clients stops. And if they did directly hedge positions(which I think they don't) I still don't see the market being moved.

Mostly it is retail clients placing poor stops or more like it poor entries.


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## cogs (28 April 2008)

*Re: Starting to trade CFD's*



> I have never seen a CFD provider move a market to take out stops.



 I have many times over the past 10-12 years. You can actually set it up and it becomes quite obvious.



> And if they did directly hedge positions(which I think they don't)



If the majourity (sheeple) trade and think the same it would prove quite profitable. CFD companies would spend a large portion of their budget to make this action not provable and with little evidence for retailers to provide if they were suspicious.



> Mostly it is retail clients placing poor stops or more like it poor entries.



Would they be your 'retail clients'?

After speaking directly with a consultant his words were, " Yes of course we hedge" but adamant against targeting stops, but I didn't really expect him to say " Yes we target stops also".

Anyway this has been my experience and no doubt others have varying views also.


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## Trembling Hand (28 April 2008)

*Re: Starting to trade CFD's*



cogs said:


> I have many times over the past 10-12 years. You can actually set it up and it becomes quite obvious.




Show us an example of where a market was moved to take out stops. Please!
Would love to see an example of what you are talking about. What instruments are you talking about? BHP etc? Index? Forex?


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## kesso (29 April 2008)

*Re: Starting to trade CFD's*

Thanks COGS opened my eyes a bit with that spread.


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## laurietm (30 April 2008)

*Re: Starting to trade CFD's*

I'm with Cogs on this one it is very clear Ig  go after stops  just be cautious on how you use them  the market is very violatile   funnily enought  i have had a stop taken out to my advantage which was about 30 points away from trend   it was a long standind short and i think they just wanted to clean it off   also same thing  with orders to open  will just misss by point or half  then swing away   because they are market makers can do it  so when it happens treat it as learning lesson


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## Trembling Hand (30 April 2008)

*Re: Starting to trade CFD's*

What a load of Rubbish. Show me what instrument you are talking about and I will show how many Millions it takes to move something 30 points just to take out a stop or two.

This assumption has profound effects on your trading and I warn anyone not to listen to this stuff. When you get stopped out and you put it down to manipulation by your broker what is that saying about *your* approach, mindset, entries, stops AND most importantly responsibility for your OWN actions and ability to learn.

This is the problem with trading blind. If you need to trade CFDs throw away their data and watch the REAL market that its linked to the cfd to see what is really going on!!!!!


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## laurietm (30 April 2008)

*Re: Starting to trade CFD's*

Should  have specified I was talking about the xjo  index on IG  called Aussie 200 .. Agree would take bundle of money to maniplulate say BHP NAB  but who knows about  smaller stocks ...   anyway  if using MM CFD for index trading just be aware of there actions in taking out stops


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## Trembling Hand (30 April 2008)

*Re: Starting to trade CFD's*



laurietm said:


> Should  have specified I was talking about the xjo  index on IG  called Aussie 200




What would a Futures trader do if the Aussie 200 "drifted" away from the underlying SPI price? to supposedly hunt stops??????????????????????????????????????????


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## professor_frink (30 April 2008)

*Re: Starting to trade CFD's*



Trembling Hand said:


> What would a Futures trader do if the Aussie 200 "drifted" away from the underlying SPI price? to supposedly hunt stops??????????????????????????????????????????




They'd be opening an account with IG quicksmart

Now where's that application form.........


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## Timmy (30 April 2008)

*Re: Starting to trade CFD's*

TH, you have been on this track of "the MM CFD providers do not manipulate price to take out stops" for a while now.  I must admit a wariness of MM CFD providers because it is my belief they do target stops ... but you have been calling for quite some time for anyone to provide an example of where this has happened - a real example, backed up with charts etc.  From my observations of your calling for examples (or at least an example) I have _not seen one_ provided ... which I must say has shaken my belief.  I would appreciate anyone showing an example of this happening so I can snuggle back into my belief ... 'cause it is getting shaken very badly ...





Trembling Hand said:


> This assumption has profound effects on your trading and I warn anyone not to listen to this stuff. When you get stopped out and you put it down to manipulation by your broker what is that saying about *your* approach, mindset, entries, stops AND most importantly responsibility for your OWN actions and ability to learn.




This comment, should be required reading and understanding before anyone trades anything. This comment is really valuable.  I would add that if anyone does have evidence of a MM CFD provider targetting his or her stops then the solution is very simple, change your account to a DMA CFD provider - that way there is no dispute about MM manipulation and the party responsible for your stop being hit will be revealed with clarity.

Thanks TH.


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## Trembling Hand (30 April 2008)

*Re: Starting to trade CFD's*

Timmy I have been on and on about this because it is very important for a traders development. I'm not trying to make an **** of myself(although I probably have) or anyone else but it is really very very very very important to shift the focus from,

the game is rigged & and my brokers stealing from me,​
To

that trade didn't work what really went wrong?​
If you answer that question from the point that the prices you are getting are manipulated then you have no hope. Why try? But if you realize that the prices are real market prices you can then just maybe set about learning to trade with good entries & stops.

Don't get me wrong MM are crooks in the silly leverage they give you and the spreads & turning off your account when you make money etc etc. BUT in all the times I have been fluffing around with CFD & Futures & Forex I have never seen a price "drift" from the underlying market. If I did I would load up big time. BIG TIME.


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## Timmy (30 April 2008)

*Re: Starting to trade CFD's*

Hat's off to you TH ... really great stuff.


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## Uncle Festivus (30 April 2008)

*Re: Starting to trade CFD's*

Well I have had a win with IG closing me out with a stop. I couldn't see that the stop had been hit but was closed out. Gave them a ring and after a few minutes of behind the scenes silence they admitted they got it wrong and reversed the stop. Luckily it was spot gold at 863 so a lesson to all to question some of these things and you never know, you may be surprised.

He still didn't explain why it happened though, mumbled something about fractions or some such.


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## Spineli (30 April 2008)

*Re: Starting to trade CFD's*



Trembling Hand said:


> Timmy I have been on and on about this because it is very important for a traders development. I'm not trying to make an **** of myself(although I probably have) or anyone else but it is really very very very very important to shift the focus from,
> 
> the game is rigged & and my brokers stealing from me,​
> To
> ...




I'm not a fan of the MM model at all for that very concern. The Direct Market Access (DMA) model guarantees the underlying prices on the ASX so you will never find yourself loading up BIG TIME! If you trade at a loss, then you can only blame one person, yourself!


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## Trembling Hand (30 April 2008)

*Re: Starting to trade CFD's*



Spineli said:


> If you trade at a loss, then you can only blame one person, yourself!




I'm not sure what your point is here??


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## Spineli (30 April 2008)

*Re: Starting to trade CFD's*



Trembling Hand said:


> I'm not sure what your point is here??




Just following up from your point re: Market Makers and how a trader should behave if they have made a loss on a trade.

i.e. with DMA, since the price of the contract traded is guaranteed to be the same as that in the underlying market, if you make a loss on your trade, you really can't blame your broker/provider...alternatively with the MM model, it is possible for the MM to adjust spreads such that they deviate from market spreads (although it rarely would happen) such that if you occasion a loss on a particular trade, then you could place partial blame on the MM...


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## Trembling Hand (30 April 2008)

*Re: Starting to trade CFD's*

Yep fair enough spreads are wider in the MM model. thats true.


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## MoneyNeverSleeps (4 May 2008)

*Re: Starting to trade CFD's*



Trembling Hand said:


> If you need to trade CFDs throw away their data and watch the REAL market that its linked to the cfd to see what is really going on!!!!!




I can certainly see where this advice would be would be invaluable for day trades however I gather that this does not really apply to scalp trades where you are in and out based purely on what Market Maker etc are showing?


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## peter2 (4 May 2008)

*Re: Starting to trade CFD's*

TH has already mentioned this. 
It is extremely difficult to scalp 2,3 tics if the MM spread is 2,3 tics. 
It is slightly easier to scalp 2,3 tics if the real market spread is 1,2 tics.

When you trade against MM spreads you must aim for bigger moves, at least 5x the spread.


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## >Apocalypto< (4 May 2008)

*Re: Starting to trade CFD's*



peter2 said:


> TH has already mentioned this.
> It is extremely difficult to scalp 2,3 tics if the MM spread is 2,3 tics.
> It is slightly easier to scalp 2,3 tics if the real market spread is 1,2 tics.
> 
> When you trade against MM spreads you must aim for bigger moves, at least 5x the spread.




so true peter.

like TH has said, sure u can use a two point spread and day trade but each time u lose u add two. that aspect makes it really hard almost impossible. I had a shot at it did well in picking them but my losers just ate away my wins!

I was trading IG Australia 200 cash 2 min and 3 min. I agree totally with u i did much better when trading higher time frames.


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