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Trading dax futures vs CFD
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Trading dax futures vs CFD

  #1 (permalink)
stockholm
 
 
Posts: 8 since Oct 2018
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Trading dax futures vs CFD

Hello guys!

Ive been trading Dax CFDs for a while now and my size have increased dramaticly. iam doing great with CFD for the moment, and have nothing to complain about yet. However when I read around on forums, people always writing that futures is a must. Does anybody know why futures is that much better?

I live in Europe and for what ive seen the IB broker is the most pupular choice, and if ive undersood it right the spread is 0,5 and commission would be 4euro roundturn (taken from there site).

And now I trade Dax at a CFD broker with DMA and the spread is 1 with 0 commission.

What am I missing that everybode sees to know about futures?

i know there are similar threads alredy, but I was thinking that the terms must have changed, maybe 5yrs ago the terms of CFDs or spread was much worse, this is the only thing I can image is the scenario??

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  #2 (permalink)
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  #3 (permalink)
Trieste Italy
 
 
Posts: 133 since Feb 2018
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Redcycle View Post
Hello guys!

Ive been trading Dax CFDs for a while now and my size have increased dramaticly. iam doing great with CFD for the moment, and have nothing to complain about yet. However when I read around on forums, people always writing that futures is a must. Does anybody know why futures is that much better?

I live in Europe and for what ive seen the IB broker is the most pupular choice, and if ive undersood it right the spread is 0,5 and commission would be 4euro roundturn (taken from there site).

And now I trade Dax at a CFD broker with DMA and the spread is 1 with 0 commission.

What am I missing that everybode sees to know about futures?

i know there are similar threads alredy, but I was thinking that the terms must have changed, maybe 5yrs ago the terms of CFDs or spread was much worse, this is the only thing I can image is the scenario??

Hi, with cfds 1 point of spread means that if you trade the equivalent of 1 futures you're trading 25€ at point ( 1 point of dax is 25€) ... so by using the cfd you spend 25€ ( = your 1 point of spread ) to enter the market and another 25€ to exit... so 1 roundturn for you with cfd is equal to 50€ .... i would call it a 'commission' even if they said zero commission and only one point of spread. So compared to the 3/4 euro roundturn of futures there's is already a big difference.

Then the most important thing is that the Dax futures market ( as every futures market ) is a regulated market and in a book you can see every single contract bought/sold in the world... its datas are the SOURCE that every cfd broker uses to create their data so cfd brokers themselves decide what price to quote, not the market. Futures market is a real market, cfd markets are not... they can be easy manipulated in cases of sudden volatility ...

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  #4 (permalink)
stockholm
 
 
Posts: 8 since Oct 2018
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Dvdkite View Post
Hi, with cfds 1 point of spread means that if you trade the equivalent of 1 futures you're trading 25€ at point ( 1 point of dax is 25€) ... so by using the cfd you spend 25€ ( = your 1 point of spread ) to enter the market and another 25€ to exit... so 1 roundturn for you with cfd is equal to 50€ .... i would call it a 'commission' even if they said zero commission and only one point of spread. So compared to the 3/4 euro roundturn of futures there's is already a big difference.

Then the most important thing is that the Dax futures market ( as every futures market ) is a regulated market and in a book you can see every single contract bought/sold in the world... its datas are the SOURCE that every cfd broker uses to create their data so cfd brokers themselves decide what price to quote, not the market. Futures market is a real market, cfd markets are not... they can be easy manipulated in cases of sudden volatility ...

Thank you very much for this detailed answer!

But If I enter and exit the market same time with CFD, isnt the cost totaly 25? Why should I pay the 1pip spread twice?

And ofcourse this cost also applies to futures, right? But the futures spread is 0,5 instead of 1. So instead of paying 25 x2 its 12,5 x2 ?



Yes ive understood that, but does those kind of manipulations happens often? Ive been with my broker for 2yrs and placeing in avarge 5-10 trades in dax, and ive never notices something strange, it isnt like they can manipulate dax 200points or? I think this is very important information for me to know, but there are so meny lies out there in forums, feels really nice to get info from you guys that know this!!

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  #5 (permalink)
Brisbane, Queensland, Australia
 
Trading Experience: Advanced
Platform: JIGSAW/SIERRA CHART
Broker/Data: MacQuarie Futures/AMP Clearing/CQG
Favorite Futures: HHI, HSI, FDAX
 
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Redcycle View Post
Thank you very much for this detailed answer!

But If I enter and exit the market same time with CFD, isnt the cost totaly 25? Why should I pay the 1pip spread twice?

And ofcourse this cost also applies to futures, right? But the futures spread is 0,5 instead of 1. So instead of paying 25 x2 its 12,5 x2 ?



Yes ive understood that, but does those kind of manipulations happens often? Ive been with my broker for 2yrs and placeing in avarge 5-10 trades in dax, and ive never notices something strange, it isnt like they can manipulate dax 200points or? I think this is very important information for me to know, but there are so meny lies out there in forums, feels really nice to get info from you guys that know this!!

Simply put, your not trading the real market, dma data or not. If you’re profitable on a cfd you can only improve your costs, execution and counter party risk by going with the real thing. Pick a broker that has CQG data and low brokerage and get on with it. You’ll be paying 4-8 euros a round trip or less.

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  #6 (permalink)
stockholm
 
 
Posts: 8 since Oct 2018
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xiaosi View Post
Simply put, your not trading the real market, dma data or not. If you’re profitable on a cfd you can only improve your costs, execution and counter party risk by going with the real thing. Pick a broker that has CQG data and low brokerage and get on with it. You’ll be paying 4-8 euros a round trip or less.

ok, do you have any tip for me what to search for if I want to get better understanding for this? I rly thought DMA is good, I know its not like futures, but still very good and not a "bucket shop" as meny refers CFD brokers to..

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  #7 (permalink)
Super Moderator
Sarasota FL
 
Trading Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
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xiaosi View Post
Simply put, your not trading the real market, dma data or not. If you’re profitable on a cfd you can only improve your costs, execution and counter party risk by going with the real thing. Pick a broker that has CQG data and low brokerage and get on with it. You’ll be paying 4-8 euros a round trip or less.


Redcycle View Post
ok, do you have any tip for me what to search for if I want to get better understanding for this? I rly thought DMA is good, I know its not like futures, but still very good and not a "bucket shop" as meny refers CFD brokers to..

I've never traded CFD's, for the simple reason that they are illegal in the United States, so I am certainly no expert. Therefore anything I say will be of a general nature and not based on personal experience, so take it for no more than it's worth.

For what it is worth, as @xiaosi said, with CFD's you are not trading in the world-wide market. You're trading with your broker. With DMA, your connection to the real market is still not direct, but is only through your broker.

No matter what the commissions and other fees may be, the broker is going to make some money, and the fact that you are trading with them gives them a guaranteed edge over you. You can expect them to make use of this. It will show up in the bids and offers that they provide you, and in the closing prices you receive.

On a regulated exchange, you are getting the bids and offers of a large number of independent traders, and your trades actually settle at the prices quoted -- meaning, you are in a real market.

I am not telling you not to trade CFD's (well, actually I sort of am ) -- I am saying that you will have a better chance at a fair shot at real prices if you trade in a market that has, well, real prices, determined by real supply and demand.

There is a reason that CFD's are illegal in the US, and I don't think it is only from opposition from US brokers and exchanges (who certainly could and probably would adapt to any profit-making opportunity presented to them -- probably quite eagerly). I think it is because US regulators do not think it gives traders a fair deal.

With that said, I am no expert on CFD's, so take this only as my opinion. Most people on this forum probably will agree, but most people on this forum are trading on actual exchanges, with many, many participants competing for the best price. With any trading instrument that is tied to one broker, you are trading only with that broker and you are dependent on that one broker. Not the best situation, in my view.

Bob.

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  #8 (permalink)
Brisbane, Queensland, Australia
 
Trading Experience: Advanced
Platform: JIGSAW/SIERRA CHART
Broker/Data: MacQuarie Futures/AMP Clearing/CQG
Favorite Futures: HHI, HSI, FDAX
 
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Posts: 499 since Feb 2012
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Redcycle View Post
ok, do you have any tip for me what to search for if I want to get better understanding for this? I rly thought DMA is good, I know its not like futures, but still very good and not a "bucket shop" as meny refers CFD brokers to..

Any brokers that provide access to Eurex futures, AMP, Stage 5, Optimus, Advantage....

I’ve been with AMP and CQG for 8 years....top quality data.

The FDAX is the equity index future contract. Anything else is a derivative of that.

You’ll actually be able to see 10 levels of depth.

Good trading...

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  #9 (permalink)
stockholm
 
 
Posts: 8 since Oct 2018
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xiaosi View Post
Any brokers that provide access to Eurex futures, AMP, Stage 5, Optimus, Advantage....

I’ve been with AMP and CQG for 8 years....top quality data.

The FDAX is the equity index future contract. Anything else is a derivative of that.

You’ll actually be able to see 10 levels of depth.

Good trading...

THanks for your answer, do you have any idea if mini dax future is somehow worse then the real dax future to trade?

And I dont know if this is true, but ive read on the internet that one thing thats very dangerous in futures market is that if its very volatily, then they can skip your stoploss, and you end up with a giant loss if you are not infront of computer?

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  #10 (permalink)
Austria
 
 
Posts: 234 since Jan 2017
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Of course the FDXM (mini Dax futures) has the same moves as the FDAX, but it is not that expensive as the FDAX.

FDXM 1 point = € 5.-- FDAX 1 point = € 25.--

I personal trade the FDXM and chart the FDAX.

I'm not a CFD-fan (because I don't want to trade against my broker and because CFD are not regulated), but it is good for beginners, because you can scale down however you want it, i.e. you can trade the DAX 1 point € 1.-- if you want.

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