Advice on CFD providers

[RazzaDazzla]

I've recently signed up with The Chartist.

Apologies to any chartist forum users who see this. Also apologies because I'm guessing this question has been asked 1,000 times.

I'm in the process of opening an IB account (bit of a online paper nightmare).

I'm thinking I will need an 'Australian' CFD provider to allow me to trade CFDs. I have had a demo account with IG markets previously and I was somewhat impressed with it's charting etc.

Anyway, I'm just after some words of wisdom of which Aussie CFD providers to give my custom too.

At the moment I am thinking of either IG Markets or CMC Markets, though I am a little 'nervous' over CMCs latest news in the last week or so about re-structuring the company etc.

Also, I believe CMC to be a MM whilst IG is DMA. So I am after opinions on who people beleive the best CFD provider is for price, spread, data, tools, charting and transparency to the underlying market.

Thanks.

 

[AlterEgo]

Go with a DMA provider. I used CMC some years ago and wasn't impressed with the wide spreads. DMA is much more transparent. I've recently opened a DMA CFD account with FP markets and have been happy with it so far. They use the WebIress trading platform if you're familiar with that.

 

[Boggo]

I've recently signed up with The Chartist.
Anyway, I'm just after some words of wisdom of which Aussie CFD providers to give my custom too.
Thanks.

If you want an Australian DMA just for ASX Stocks and Indices then I think you should have a look at Marketech.

Ring them and you will get Sean or Benny, very helpful.

Just my as I use them.

 

[RazzaDazzla]

I guess I wouldn't mind a provider that would also allow me to buy stock and also write/buy options

 

[Glen48]

GFT is another one they are world wide and work out of USA, supply a demo and seem to be good at their word so far.
Global Fx Traders

 

[RazzaDazzla]

So many to choose from.

I have just applied for an IG Markets account.

I have used a demo account with them before and it seemed pretty good. I guess it's just a matter of giving it a go with some real money and seeing what happens.

 

[Wysiwyg]

Also remembering that DMA is a CFD from your service provider who buy/sell in their name for you.

It is very important to note that while you are trading based
on underlying market prices and depth, what you actually
receive on placing a trade is a CFD from us.

If the margin check is satisfied, we will place an order in
our name in the market and, simultaneous to this, we
will create a ‘mirror’ CFD between you and us.
So while you are trading at market prices, you do not gain
any ownership rights over the shares or futures which form
the subject of your CFD.

 

[RazzaDazzla]

Thanks WYSIWYG,

I have just received an email from IG markets saying my account is ready to go. It's a little bit scary how quick it was. Just need to fund it now.

So what is the actually practical process of placing a CFD trade with a DMA provider like IG markets?

If I go long 20 QAN Shares, does IG then physically buy 20 of these under their name and then sell them when I close my position?

Then the profit they get is from the brokerage/commission they charge me?

 

[Wysiwyg]

Thatsokay

You could read the L2 Dealer platform manual first to have a better understanding before jumping in.It is easy to read and explains the platform.

 

[Wysiwyg]

Also like to add that any gambling addiction would be detrimental to account balance.

 

[RazzaDazzla]

Saying that trading CFDs is akin to gambling?

 

[Wysiwyg]

No.But can become so if having an addictive disposition.

 

[cogs]

RazzaDazzla,

Just my experience.

Started and blew my first 10k with CMC, so that was my learning curve over 3-4 years. At that stage I had not done enough reading, training nor learnt how to apply self discipline techniques. Moved on to Cityindex and haven't looked back since. Their platform and policies allow for practical, sensible and profitable trading.

I opened up an account with IGMarkets at one stage and you will need to open one of their L2 Dealer Platforms (deposit min 10k) to apply some of your techniques, my advice, don't try and trade with their starter 'Limited Risk' accounts you will do your dough in no time, especially in a sideways trending market. Try their demo account as well.

Others may have experienced different.

 

[RazzaDazzla]

RazzaDazzla,

Just my experience.

Started and blew my first 10k with CMC, so that was my learning curve over 3-4 years. At that stage I had not done enough reading, training nor learnt how to apply self discipline techniques. Moved on to Cityindex and haven't looked back since. Their platform and policies allow for practical, sensible and profitable trading.

I opened up an account with IGMarkets at one stage and you will need to open one of their L2 Dealer Platforms (deposit min 10k) to apply some of your techniques, my advice, don't try and trade with their starter 'Limited Risk' accounts you will do your dough in no time, especially in a sideways trending market. Try their demo account as well.

Others may have experienced different.

Re. Limited Risk account with IG markets. why is ti easier to do your dough with this? is that because of added premium charged for using guranteed stops?

also, what's the main difference between L2 platoform and the vanilla "pure deal" platform?

I'll check out cityIndex too

 

[RazzaDazzla]

EDIT: The more I think about it, the more I'm beggining to think it might just be easier/better value to trade on a margin via a broker like InterctiveBrokers rather than stuffing around with CFDs.

 

[robots]

hello,

stick it in the bank man, ing or someone

yes cfd is betting, the provider does not have to buy the stock when you buy, its all smoke and mirrors,

100pg PDS, they have no obligation to you for anything, to follow current share price with MM or DMA

contract for difference, its a make believe market

thankyou
robots

 

[awg]

the only real advantage i see at the moment with CFDs is u can short the index.

would have been a winning play of late.

sure there are other methods,(to short) but is cheap and easy

 

[CanOz]

the only real advantage i see at the moment with CFDs is u can short the index.

would have been a winning play of late.

sure there are other methods,(to short) but is cheap and easy

People use CFD's wrong. A trader should use them to increase exposure to the NUMBER of positions, thereby increasing the odds of striking a winner. If you use CFD's to increase your leverage and risk in each postion then its a script for disaster.

The same can be accomplished with IB margin trading. I prefer this for Equities because of the order execution, and the cost of brokerage.

Cheers,


CanOz

 

[RazzaDazzla]

Thanks CanOZ, (I'e seen your name at the chartist too).

Makes sense what you say re. increase number of positons, not the size of a position.

I am wanting to limit myself to a maximum of 2% of my account on any trade. Such that in a perfect world I would have 3 or so open posiitons at any time, with stops in place so that my maximum loss would be no more than 2% of my account.

Margin 'scares' me. trading with 'borrowed' money. But then I guess that CFDs are a synthetic margin loan anyway.

I'll just have to get my head around a few things. If I was opening a CFD account with $10K, what would be the synthetic equivalent with a margin?

I guess it works the same, I would just buy/short as many shares as I could as long as; (stop price x number of shares) < 2% of my account. Any interest charges on the margin would then just be thought of as funding rates for CFDs.

If a share has a LVR of say 75%, then I assume I just need to fund the other 25% with cash from my account. Would this limit the number/size of positions I could open with a margin versus CFDs?

Hmmmm really got my brain thinking now. Now I really am thinking trading on a margin will be much more transparent and 'better' than CFDs.

 

[CanOz]

You'll find that with a margin account, you can, in many cases decrease your risk even more. With a 30k account, you effectively get nearly 100k in buying power with Interactive Brokers margin accounts. Thats means you can still use a 1% risk per trade, and get plenty of exposure to many positions at once. This all depends on currency value etc.....which is a big consideration at the moment.

Trade for the long haul, by that i mean, you want to be trading 12-18-36-72 months from now. If you control your risk, keep your losses small, you'll live to trade another day, and learn even more.

CFD's hurt me, but the truth is i was not ready to trade on margin. The move to IB coincided with my maturity in dealing with risk.

Cheers,


CanOz