Australian (ASX) Stock Market Forum

Preferred CFD Providers

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Re: Prefered CFD Providers

Just a quick question for some of you guys.I am considering trading CFDs in some of the big resource stock,BHP,RIO etc.What i hope to do is catch some of the volatility that is about at the moment and on paer i would be doing well.My question is this what advantage is it to me say to buy 1000 share in BHP(via a cfd) compared to actually buying the shares outright.I hope to sell fairly quickly and then get back in etc etc!!!!!!!
 
Re: Prefered CFD Providers

ok example

Lets say BHP bounces back (which eventually they will unless something major happens against them) and you were to buy 10000 shares at say $30 each. This would equal $300,000 in total but with CFD's you would only need to put up a margin which in IG's case is 5% but CMC i hear its 3% so lets go with 3% (more leverage). This now will only require you to outlay $9000.

So if you had a bank of $50,000plus it would be very convenient.

Lets say BHP jumps upto $35 in 2 months (say 60 days), you would have stood to make a profit of $50,000.

Now lets look at the positives and negatives of each

Buying shares outright:

Positives
* less downside exposure (since your outlaying the full amount the only lose 1:1 ratio)
* No interest because no loans
(thats about it hehe not sure on tax etc.. thow)

Negatives
* Full outlay required (ill leave margin loans out).
* Cash on Cash returns are limited (the cash you outlay compared to the cash you returned). $50,000 profit is 16.6% cash on cash return of $300,000.


CFD's:

Positives
* Massive upside exposure
* Only outlaying 3% compared to 100% which allows you to gear up 97%
* Cash on Cash returns are sensational, over 390% cash on cash return of $12780 (including interest which is shown below).

Negatives

*Massive downside exposure (but with good risk management you can minimise this greatly by using Stops etc..)
*Interest payable on the CFD is ($300,000 x 7.75% (RBA + 2%) / 365 days = $63 per day x 60 days = $3780.

Brokerage and other fee's have been left out for simplicity.


All in all if you are investing for capital growth and your views are strong about a particular company after doing your F/A & T/A and other research then it is more wise IMO to use CFD's simply because of the leverage capabilites.


Think of it like this, imagine being a real estate investor and having to pay the full amount of property yourself? ask yourself how many properties will you be able to own in 10 yrs time?

Like Robert Kiyosaki says "Leverage can be your best friend or worst enemy, how you use it is up to you"

Adrian
 
Re: Prefered CFD Providers

Adrian thanks for the reply,pretty much what i thought except forgot about the interest
 
Re: Prefered CFD Providers

Ageo have you decided to which you'll have a go?

I opened an account with MBL and was shocked to find majority are not GSL-offered and i can't even short a lot of the stocks!
https://www.macquariecfd.com.au/CFDMarketInfo/viewTradingStockInfo.do

basically i think my criteria are:
1) safety of my money
2) DMA
3) low margin rate (you can find 45% in MBL's website)
4) fast data update and order execution

Gosh am I asking for too much.......?

If you've found a good one please let me know.

cheers
hissho
 
Re: Prefered CFD Providers

hissho said:
Ageo have you decided to which you'll have a go?

I opened an account with MBL and was shocked to find majority are not GSL-offered and i can't even short a lot of the stocks!
https://www.macquariecfd.com.au/CFDMarketInfo/viewTradingStockInfo.do

basically i think my criteria are:
1) safety of my money
2) DMA
3) low margin rate (you can find 45% in MBL's website)
4) fast data update and order execution

Gosh am I asking for too much.......?

If you've found a good one please let me know.

cheers
hissho
Click to expand...

Hissho, i went with CMC because of the following:

* They pay interest on the funds you dont use (and of course its safe as its in a trust account).

* It is DMA (which i didnt know at 1st for shares but not sure about the others) which is 10 times better and the prices you get are from the underlying and not the Market Makers (which screw you even harder after paying commission on top!)

* The top 20 cap is 3% then the rest of the 200 is 5% and the others are 10%+ (so by far the best margins from what i have seen)

* Data is real time and order execution is super fast hence the DMA which provides extra liquidity and assures you can get in and out for the prices you want.

* GSLO and NGSLO on pretty much all the stocks (at least the top 200)

* Long and Short on basically everything (again at least the 200 and all other indicies/commodoties etc..)

Have a read of there PDS and it will explain a fair bit of it to you.

If you want to open an account let me know and ill put you onto someone that will help you.

Hope this has helped: Also another thing that attracted me was the Australian Stock Report uses CMC for CFD trading (part of there CFD report) which helps me to base my trades on theres.

Adrian
 
Re: Prefered CFD Providers

Thanks Ageo

2 more questions:
1) can i do index with them?

2) are u 100% sure that CMC is not a MM? coz more than 1 person told me they are MM and some horrible stories...how can i find out the truth?

thanks again
hissho
 
Re: Prefered CFD Providers

hissho said:
2) are u 100% sure that CMC is not a MM? coz more than 1 person told me they are MM
Click to expand...

from their product disclosure statement:

1.2 CMC Markets acts as principal
CMC is a market maker, not a broker, and accordingly
will act as a principal, not as an agent, in respect of all
transactions with you.

14. Charges
...as CMC acts as a market maker, its spreads
may be wider or narrower than those available in the
underlying market and it may derive a financial benefit
from this.

5. Pricing
5.1 ...Customers should note that:
(a) CMC acts under this Agreement as a market maker, and accordingly, sets the applicable price at which it is prepared to deal with a Customer;
Click to expand...
 
Re: Prefered CFD Providers

Direct Access to Market Prices

CMC Markets offer exchange prices and extra liquidity to the top Australian Share CFDs.
Click to expand...


This is on the main page, i interpret this as direct market? (For the top aus shares thow which is fine with me). But i will ask thanks for the heads up

As with the index's etc.. they have the tighest spreads i believe compared to others. So yes hissho you can do index's and other markets.
 
Re: Prefered CFD Providers

Coy

I think they mean an extra 20% but im not sure, you can ring them and ask if you want.
 
Re: Prefered CFD Providers

A couple of points.

1. Whatever instrument you use you should always look closely at who is taking the other side of your trade.
I used CMC (Australia) in the past to trade less liquid UK listed stocks.
I'm certain they weren't hedging my trades in the underlying market.
I was pair trading stocks and increasingly I was finding that the losing leg was easy to close out, but the bid/ask spread on the winning leg became so wide that it swallowed up most of the profits.

In the end, I was finding that as soon as I opened any position, their bid/ask spread on that stock would immediately widen.
I believe that they basicly closed me down, because I was trading profitably, and my profits were their loss. You're never going to win trading against a market maker.

Admittedly, if you are trading the more liquid stocks that are relatively cheap to hedge, this shouldn't be such an issue. But the experience certainly left a bad taste in the mouth.


2. The reason CFD's are so big in the UK is all to do with tax.
In the UK purchases of shares attract a 1% stamp duty as well as capital gains on profits.
CFD's have no stamp duty, but profits are still subject to either CGT or income taxes (depending on the whims of the local tax office).
Spread betting on the other hand is classified as gambling in the UK and is therefore CGT free. However, I believe that bookmakers have to pay a small tax on all bets which is reflected in the slightly wider spreads compared to CFD's.
 
Re: Prefered CFD Providers

My recent experience with CMC: Trading the Aussie200 index, I could never get the quoted bid or offer as they would re-quote EVERY time. Depending on the size of contract you were opening/closing eg when the qty is 50 there is no trouble opening/closing at the screen bid/offer. But if I had a postion of 400 they would re-qoute at up to 2 pips away from the prevailing screen price, especially if I was winning in the trade. Not sure why they even bother with a screen bid/offer price!!
Make no mistake, playing CFD's with CMC you have to play it by their rules, which they appear to make up on the spot sometimes. However, it just makes it that much better when you beat the suckers at their own game.
Having said that, If you are prepared to play their game, they do have low commissions and a wide range of world markets to bet on.
 
Yes, I'd forgotten about their constant requote.

If your trading in any size, then the low commissions CMC charge are more then offset by the poor prices you get.

There's no doubt in my mind that CMC like their clients to be losers. And if the statistics on day-trading are anything to go by, most of them are.

I had a pretty good experience with E-Trade Pro (UK). Obviously it helps if you have a UK bank account, although I'm not sure if it's necessary.
While their commissions are higher (AUD$30?), I never had problems getting a fair price.
They also didn't charge an ASX access fee.
 
The spread on shares are never more than 1 pip away. So for me thats ok, indicies is where they like to move a little bit.

I can only trade and see for myself if they are worth it or night.
 
Ageo said:
The spread on shares are never more than 1 pip away. So for me thats ok, indicies is where they like to move a little bit.

I can only trade and see for myself if they are worth it or night.
Click to expand...

Ageo,

If you start taking money off them, watch them start to play games with you. The requote is the classic technique they use. :2twocents
 
wayneL said:
Ageo,

If you start taking money off them, watch them start to play games with you. The requote is the classic technique they use. :2twocents
Click to expand...



hehe wayne i dont risk more than 2% on my total capital on any 1 trade anyway. So i will see how they play. Then determine from there.....
 
hello,

i believe they offer good computer platforms

a good option if taking a longer position were you are looking for a distinct up/or down swing, so pips and spreads arent as big an issue

as mentioned b4, traded with IG Index, is great for indexes around the world,

good luck dealing with them when you are profitable

nothing wrong with betting on things

thankyou
robots
 
i went to a short seminar on cfd trading in auckland i was impressed so i opened an a/c with cmc markets, i like there platform and the leverage that you get, i have taken just i open position to test the water, so will see how it goes when i close it. porkpie
 
porkpie324 said:
i went to a short seminar on cfd trading in auckland i was impressed so i opened an a/c with cmc markets, i like there platform and the leverage that you get, i have taken just i open position to test the water, so will see how it goes when i close it. porkpie
Click to expand...


Hi Porkpie,

What was the trade on: shares, index's ?


thanks

Adrian
 
Think a few points have been overlooked in this thread :

with CMC
1: U can vertially trade around the world 24hrs a day

2: U are not limited to the OZ market only --- US GB CANADA JAPAN etc etc.

3: U can go Long whilest a stock is rising AND then Short while its dropping (hence double dipping ) have been playing BHP in the UK like this --- U must watch the FX rates though

4: Cannot see why CFDs are not suitable for investing ---- if U borrow to invest U are going to pay interest --- the main catch with CFDs in this area is that U are allways borrowing 95% -- But need to be 25% Liquid ( 5% margin + 20% additional to the margin (liquidity) @ all times --( but if U are playing Short then they are paying U interest)

5: Brokerage for trading Int Shares is around the same or cheaper than trading Oz shares in Oz --- check out how much Commsec charge for Trading Internationally !

6: No Charge for live International feeds ---- No min Buy or Sell ($500 ASX)

( great whilst you are a newbie --- when CMC first started in Oz there was
NO BROKERAGE charge -- so instead of paper trading I used to play NEM-US for just a couple of shares --- U learn so much faster when there is money involved , rather than just paper losses )


The only Gripes I have with CFDs are that U are limited to the major stocks only , you will find no OXR here, and that Volume is not advaible , although the latter can usually be found elsewhere

As CFDs gain in popularity and people begin to understand thier uses better then either the ASX and Oz brokers get their act together or they all be going out the back door ---- IMHO





Cheers
Coyotte
 

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